Using Random nth Price Auctions to Value Non-Market Goods and Services |
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Authors: | List John A |
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Institution: | (1) AREC, University of Maryland, 2200 Symons Hall, College Park, MD, 20742-5535 |
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Abstract: | Public policy decision making often requires balancing the benefits of a policy with the costs. While regulators in the United States and abroad rely heavily on benefit-cost analysis, critics contend that hypothetical bias precludes one of the most popular benefit estimation techniques—contingent surveys—from providing reliable economic values for nonmarket goods and services. This paper explores a new methodology to obtain the total value of nonmarket goods and services—random nth price auctions. The empirical work revolves around examining behavior of 360 participants in a competitive marketplace, where subjects naturally buy, sell, and trade commodities. The field experiment provides some preliminary evidence that hypothetical random nth price auctions can, in certain situations, reveal demand truthfully. |
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