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

Published online by Cambridge University Press:  14 March 2025

Laurent Muller  and
Bernard Ruffieux
Laurent Muller*
Affiliation:
INRA, UMR 1215 GAEL, 38000 Grenoble, France Université de Grenoble 2, UMR 1215 GAEL, 38000 Grenoble, France
Bernard Ruffieux*
Affiliation:
INRA, UMR 1215 GAEL, 38000 Grenoble, France Université de Grenoble 2, UMR 1215 GAEL, 38000 Grenoble, France Institut National Polytechnique Grenoble INPG, Génie Industriel, 38000 Grenoble, France
*
e-mail: laurent.muller@grenoble.inra.fr
e-mail: bernard.ruffieux@ensgi.inpg.fr
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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

Experimental economicsWillingness to payAuctionPosted priceValue elicitationConsumer behavior

JEL classification

D44: Auctions C91: Laboratory, Individual Behavior

Information

Type
Research Article
Information
Experimental Economics , Volume 14 , Issue 2 , May 2011 , pp. 181 - 202
Copyright
Copyright © Economic Science Association 2010

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Footnotes

Electronic supplementary material The online version of this article (doi: 10.1007/s10683-010-9262-4) contains supplementary material, which is available to authorized users.

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