Willingness to Pay for Multiple Quantities of Animal Welfare Dairy Products: Results from Random Nth‐, Second‐Price,and Incremental Second‐Price Auctions

Nonhypothetical experimental auctions are used to elicit willingness to pay for humane animal care‐certified dairy products: cheese and ice cream. We use second‐price, random Nth‐price, and incremental second‐price auctions in multiproduct, multiquantity, and multiround contexts. The results contrast participants’ bids across different auction mechanisms and different products. Differences in bidding patterns are detected across auction mechanisms as well as products. Our results suggest that subjects on average are only willing to pay a premium price for one unit of humane animal case‐certified ice cream but not for multiple quantities.     

The influence of African swine fever information on consumers’ preference of pork attributes and pork purchase

This paper uses a randomized survey instrument to study the impact of African Swine Fever (ASF) information on Chinese consumers’ preference for pork attributes and purchases during the recent peak of the ASF pandemic in 2019. We study consumers’ preference for pork attributes including brand, meat texture and taste, quality safety assurance, and traceability under different information treatments. Results show that the willingness to pay (WTP) for quality safety assurance is the highest, followed by brands and traceability systems, and the WTP is lowest for good taste. We show that providing detailed ASF information substantially changes consumer preference by altering the relative importance of pork attributes and price sensitivity, which enables consumers to focus more on safety-related attributes while paying less attention to price and taste attributes. Furthermore, we find that a higher belief in the future of ASF occurrence reduces the frequency of purchases marginally but does not significantly influence for amount per purchase and the total purchase amount.     

Posted Prices and Bid Affiliation: Evidence from Experimental Auctions

In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article, we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions.     

Willingness to Pay versus Expected Consumption Value in Vickrey Auctions for New Experience Goods

Over the past two decades, Vickrey auctions have been widely used to elicit willingness to pay for new food products. This article shows that in a multiperiod context, it can be optimal for consumers to bid higher than the expected consumption value for a new experience good to obtain information about how the new good fits into their preference set. The degree of uncertainty about the consumption value, the purchasing frequency, and expected future market prices affect both the expected value of the quality information and the subgame perfect bidding strategy in Vickrey auctions for new experience goods.     

Experimental Auction Procedure: Impact on Valuation of Quality Differentiated Goods

Despite increased use of experimental auctions, a myriad of different procedures are being employed without formal consideration of how the procedures might affect results. This study investigates the effect of several procedural issues on valuation estimates from experimental auctions. Results indicate the second price auction generates higher valuations than English, Becker–DeGroot–Marschak (BDM) , and random n th price auctions, especially in latter bidding rounds, and that random n th price auction yields lower valuations than English and BDM auctions. We find that endowing subjects with a good prior to eliciting bids can have an impact on valuations, but the effect varies across auction mechanism.     

Anti-Waste Labeling and Consumer Willingness to Pay

ABSTRACT

Food waste is an important topic in the general context of food consumption sustainability and ethical consumption. Several studies have focused on environment-friendly labeling schemes based on different “ethical attributes,” such as organic, fair trade, and locally grown. However, the effect of a labeling scheme based on food waste prevention has never been studied. In the current work, experimental auctions were used to investigate the effect of a certification about containing food waste within a certain threshold on participants’ willingness to pay. The product chosen for the auctions was the French baguette (500 g) packaged with a paper wrapper. Furthermore, we examined whether the effect would be moderated by different communication strategies about the consequences of wasting. Specifically, two different frames of reference were used: the first is based on the carbon footprint, the other on the water footprint. Our results showed that waste prevention–based labeling positively affected participants’ willingness to pay and that this effect was enhanced by the carbon footprint frame of reference.     

Are United States Consumers Tolerant of Genetically Modified Foods?

Controversy surrounds the introduction of genetically modified foods. One key issue relates to tolerance levels—the impurity rate tolerated before a commodity must be labeled. Currently, the United States has not defined a tolerance level for genetically modified foods. This paper uses data from experimental auctions to test whether consumers prefer foods with 0, 1, or 5% tolerance levels for genetically modified material. We conclude consumers would pay less for food that tolerates genetically modified material, but find no evidence that consumers' place different values on foods with 1 and 5% genetically modified content.     

Do Japanese consumers care about sustainable fisheries? Evidence from an auction of ecolabelled seafood

This paper investigates Japanese consumers' willingness to pay for Marine Stewardship Council (MSC) ecolabelled seafood using a sealed bid, second price auction. Participants in an experiment in Tokyo were provided varying degrees of information about the status of world and Japanese fisheries and the MSC program in sequential rounds of bidding on ecolabelled and nonlabelled salmon products. A random‐effects tobit regression shows that there is a statistically significant premium of about 20 per cent for MSC‐ecolabelled salmon over nonlabelled salmon when consumers are provided information on both the status of global fish stocks and the purpose of the MSC program. This premium arises from a combination of an increased willingness to pay for labelled products and a decreased willingness to pay for unlabelled products. However, in the absence of experimenter‐provided information, or when provided information about the purpose of the MSC program alone without concurrent information about the need for the MSC program, there is no statistically significant premium.     

European Consumers' Willingness to Pay for U.S. Beef in Experimental Auction Markets

Consumers' willingness to pay for Irish, Norwegian, U.S. hormone-free, and U.S. hormone-treated beef was studied in an experimental auction market. We ran four simultaneous second-price auctions to elicit efficiently the complete distribution of willingness to pay differences among our four alternatives. Most participants preferred domestic to imported beef, and half the participants preferred Irish to U.S. hormone-free beef. Hormone-treated beef received the lowest mean bid, but 28% of the participants were indifferent or preferred U.S. hormone-treated to U.S. hormone-free beef.     

Estimating consumer willingness to pay for food quality with experimental auctions: the case of yellow versus fortified maize meal in Kenya

Biofortification of maize with provitamin A carotenoids is a new approach to the alleviation of vitamin A deficiencies in Africa. Unfortunately these varieties are yellow or orange, while consumers generally prefer white. Consumer willingness to pay for yellow and fortified maize was compared in experimental auctions in three regions in Kenya. The premium that consumers are willing pay for fortified maize (24%) was higher than the discount they require to buy yellow maize (11%), and in one zone consumers prefer yellow. Yellow color is, therefore, not an impossible obstacle for biofortified maize, although it would clearly be easier to introduce this maize first in regions where yellow maize is currently grown.     

Chinese consumers’ willingness to pay for pork traceability information—the case of Wuxi

In this study, consumers’ willingness to pay for farming, slaughter and processing, distribution and marketing, and government certification information was investigated in Wuxi, Jiangsu Province, China using an experimental auction and real choice experiment based on incentive compatibility of the nonhypothetical elicitation method. No significant differences in consumers’ willingness to pay were revealed by the experimental auction and real choice experiment on the whole, and results from both nonhypothetical experimental methods demonstrated that consumers were willing to pay certain premiums for all four types of traceability information and had the highest willingness to pay for government certification information. These results indicate that consumers trust in pork safety protection under governmental supervision. Moreover, it was found that government certification information played a significant role in improving consumer utility, demonstrating that consumers paid close attention to safety risks in farming. Therefore, this study predicts that the introduction of governmental supervision into the pork traceability system and establishment of a system for collecting traceability information starting from the stage of pig farming will play important roles in meeting consumer demands for pork quality and safety, as well as promoting the development of traceable food policies.     

Assessing Consumers’ Willingness to Pay for Different Units of Organic Milk: Evidence from Multiunit Auctions

Experimental auctions are normally conducted using single‐unit auctions. In this paper, we use the multiunit Vickrey auction to assess the determinants of consumers’ willingness to pay (WTP) for organic milk in a multiunit shopping scenario. We also analyze the effect of positive and negative information about organic farming on WTP. Our results suggest that consumers are willing to pay a premium for organic milk but that this WTP decreases with the number of units purchased. Results also suggest that health issues, high price of organic foods, taste, and lack of information on organic foods are factors that influence WTP for organic milk. The type of information provided also plays a relevant role. Specifically, we found that subjects’ WTP responds positively to positive information about organic farming and responds negatively to negative information. The provision of both positive and negative information does not affect WTP. Les enchères expérimentales sont en règle générale effectuées sous un cadre d’enchères de Vickrey à une seule unité. Dans le présent article, nous avons utilisé l’enchère de Vickrey à unités multiples pour évaluer les déterminants du consentement à payer (CAP) des consommateurs pour du lait biologique dans un contexte d’achats multiples. Nous avons également examiné les répercussions que l’information positive et négative à l’égard de l’agriculture biologique a sur le CAP. Nos résultats autorisent à penser que les consommateurs sont prêts à payer un prix plus élevé pour obtenir du lait biologique, mais que ce CAP diminue avec le nombre d’unités achetées. Nos résultats autorisent aussi à penser que les aspects liés à la santé, le prix élevé des aliments biologiques, le goût et le manque d’information sur ces aliments sont des facteurs qui influencent le CAP pour du lait biologique. Le type d’information joue également un rôle important. Nous avons observé que le CAP réagit favorablement à de l’information positive sur l’agriculture biologique et défavorablement à de l’information négative. La diffusion simultanée d’information positive et négative n’influence pas le CAP.     

The impact of customer ratings on consumer choice of fresh produce: A stated preference experiment approach

The importance of customer ratings or reviews in online shopping has been recognized in the previous literature; however, few have studied how online customer rating scores affect consumers’ fresh produce purchases and its importance relative to other fresh produce attributes. The quality of fresh produce demonstrates high uncertainty and variation; therefore, the impact of user-generated content such as customer rating scores on the choice of fresh produce may be more complex than on other product categories. Moreover, previous studies on customer ratings have not examined the price premium that retailers can obtain based on better ratings of fresh produce. Using a stated preference approach (i.e., choice experiment), this study measures the willingness to pay for a higher customer rating score and explores its relative importance to other popular fresh produce attributes (i.e., organic, place of origin, and shelf life). The results show that customer rating is the second most important attribute after the place of origin and is more important than production methods (e.g., organic and naturally grown) for fresh strawberry purchases. Also, rating scores demonstrate a diminishing marginal impact on consumer willingness to pay. Younger consumers and households with children are willing to pay more for fresh produce with high ratings than those with low ratings.     

Why U.S. Consumers Support Country of Origin Labeling: Examining the Impact of Ethnocentrism and Food Safety

ABSTRACT

The legality of U.S. country of origin labeling (COOL) laws for agricultural products has been challenged by foreign countries. Isolating the reasons why consumers support COOL can help determine the efficiency of COOL as a policy. Therefore, this study investigated why consumers have a desire for COOL. Data were collected through an online survey with 566 U.S. participants. Results of a bivariate ordered probit model indicate that as consumers are more ethnocentric and more pessimistic about the safety of their food, they are more likely to support COOL for sugar and for sugar in soft drinks. Thus, policies designed to inform the public about the safety of foreign commodities could reduce their desire for COOL. Evidence is also provided that highly ethnocentric individuals support COOL in an effort to “buy American” products.     

Consumers’ Trust in Food Quality and Willingness to Pay More for National Parks’ Brands: Preliminary Evidence From Italy

In Italy, national parks allow the use of their brand logo and name on the labels of food products produced by firms located within the national parks. However, no empirical research has yet investigated the impact of national park brands on consumers’ attitudes and behaviors. Hence, this empirical study explores the factors that influence consumer trust in food quality and their willingness to pay premium prices for the national park brands. Results from a survey involving a sample of 227 Italian consumers suggest that women and younger consumers trust more and are more willing to pay for national park brands. The origin of food products associated with national parks, naturalness of foods, food quality certifications and branding, and the environment in which the packaged foods originate influence consumer confidence and buying behavior. Implications for food marketers and policymakers are discussed.     

Are French consumers ready to pay a premium for eco‐labeled seafood products? A contingent valuation estimation with heterogeneous anchoring

Could the future French eco‐label for fresh seafood products find its place in the French market? This study employs a contingent valuation method to estimate French consumers’ willingness‐to‐pay (WTP) for eco‐labeled fresh seafood products. We exploit original data from a survey carried out in 2010, where 626 participants responded to a double‐bounded dichotomous choice model, through an ascending or descending bid system. Controlling for shift and anchoring effects in random effect probit models, we significantly improve estimation of WTP and its determinants for the three species studied (monkfish, lobster, sole), in particular when using heterogeneous anchoring. We show that WTP is positively correlated to respondents’ income, and also to their environmental concern, to living alone, to living far from the coast, and to trusting NGOs or public institutions more than producer organizations to implement an eco‐label. We also show that the mean price premiums do not differ between species. Finally, on average, the maximum premium consumers accepted to pay is approximately 10% of the product price.     

Role of credence and health information in determining US consumers' willingness-to-pay for grass-finished beef

Consumer demand for forage- or grass-finished beef is rapidly emerging in the US. This research uses data elicited from consumer surveys and experimental auctions to provide insight on product attributes (taste/flavour, credence and nutritional characteristics) and socio-demographic factors that are most important in determining US consumers' preferences and willingness to pay premiums for grass-finished versus grain-finished beef. Information related to beef production processes increased the probability consumers would be willing to pay a premium for grass-fed beef. However, it appears that health-related messages are more important drivers of willingness-to-pay, on average, than the absence of antibiotics and supplemental hormones and traceability. Labelling information regarding grass-fed beef's nutritional content and related production processes is vital for maintaining and growing premium niche markets for grass-fed beef in the US. The relative size of the willingness to pay estimates compared to previous cost estimates suggest that the Australian beef industry may have a comparative advantage for finishing beef on forage and marketing premium grass-fed differentiated beef products in the US market.     

Buyers’ perceptions of importance and willingness‐to‐pay for certain attributes of source and production verified bred heifers

This research reports buyers’ perceptions of and willingness‐to‐pay for replacement heifers produced through a rigorous, third‐party verified production protocol. Survey respondents attended and registered to purchase heifers at sanctioned Missouri Show‐Me‐Select Replacement Heifer Program^® sales between 1997 and 2002. Responses indicate that pen uniformity, artificially inseminated to calving ease bull, synchronized calving, and heifer size are perceived as important, and their willingness‐to‐pay for these characteristics is economically significant. Though prior research suggests willingness‐to‐pay estimates particularly for inexperienced consumers may be biased, we find little difference between inexperienced and experienced buyers and also little difference from hedonic estimates of heifer characteristics’ value.     

Does Production Labeling Stigmatize Conventional Milk?

Production labeling is a common approach for differentiating otherwise similar products in the marketplace. While these labels may convey positive messages to consumers about the new product, they may simultaneously stigmatize the conventionally produced product by highlighting perceived problems. The net economic result for producers can be negative since consumers may decrease their willingness to pay for the conventional product that dominates the market, while the new product has a relatively small market share. This experimental research identifies this stigma effect in the case of milk, where the introduction of rBST-free and organic milk reduces consumers' willingness to purchase conventional milk.     

Consumers’ Valuation of Rice‐Grade Labeling

The current Korean rice‐grading system has a “no test” option that allows rice to not be graded in the market. This study examines Korean consumers’ valuation of a rice‐grading system without the “no test” option. We apply a nonhypothetical experimental auction to elicit consumers’ willingness to pay for each rice grade and identify the impact of the provision of additional grading information on product valuation. We then use contingent and inferred valuations to obtain consumers’ valuation of a mandatory rice‐grading system without the “no test” option. We find that Korean consumers are willing to pay an additional premium for each rice grade and that rice‐grading information is the most important factor that differentiates the rice products. Rice consumers in Korea also strongly prefer a mandatory rice‐grading system without the “no test” option.