Auction mechanisms and the measurement of WTP and WTA

Sungwon Cho, Cannon Koo, John List, Changwon Park, Pablo Polo, Jason Shogren and Robert Wilhelmi

Natural Field Experiments from The Field Experiments Website

Abstract: We evaluate the impact of three auction mechanisms - the Becker-DeGroot-Marschak mechanism, the second-price auction, and the random nth-price auction - in the measurement of willingness to pay (WTP) and willingness to accept (WTA) measures of value. Our results show that initial bidding in trial 1 in each auction does not contradict the endowment effect; but that, if it is the endowment effect that governs people's initial bidding behavior, it can be eliminated with repetitions of a second-price or random nth-price auction; and if the thesis is that the effect should persist across auctions and across trials is right, our results suggest that there is no fundamental endowment effect.

Date: 2001
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Journal Article: Auction mechanisms and the measurement of WTP and WTA (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:feb:natura:00516

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