Do price-tags influence consumers’ willingness to pay? On the external validity of using auctions for measuring value

Laurent Muller () and Bernard Ruffieux
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Laurent Muller: GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique
Bernard Ruffieux: GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique

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Abstract: This paper considers the external validity of the growing corpus of literature that reports the use of laboratory auctions to reveal consumers' willingness to pay for consumer goods, when the concerned goods are sold in retail stores through posted price procedures. The quality of the parallel between the field and the lab crucially depends on whether being informed of the actual field price influences a consumer's willingness to pay for a good or not. We show that the elasticity of the WTP revision according to the field price estimation error is significant, positive, and can be roughly approximate to one quarter of the error. We then discuss the normative implications of these results for future experiments aimed at eliciting private valuations through auctions.

Keywords: ENCHERE; WILLINGNESS TO PAY; POSTED PRICE; CONSUMER BEHAVIOR; CONSENTEMENT A PAYER; ECONOMIE EXPERIMENTALE; EXPERIMENTAL ECONOMICS; AUCTION; VALUE ELICITATION (search for similar items in EconPapers)
Date: 2011-05
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Citations: View citations in EconPapers (10)

Published in Experimental Economics, 2011, 14 (2), pp.181 - 202. ⟨10.1007/s10683-010-9262-4⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01799824

DOI: 10.1007/s10683-010-9262-4

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