The influence of risk and ambiguity attitudes on bidding behaviour

Chloe McCallum*, Daniel Derbyshire, W George Hutchinson, Simone Cerroni, Rudolfo M Nayga Jr

*Corresponding author for this work

Research output: Contribution to conferencePaperpeer-review

Abstract

This paper explores deviations from standard economic theory’s predictions regarding bidding behaviour under risk and uncertainty in home-grown (HGV) and induced value (IV) settings using the Becker-DeGroot-Marschak mechanism (BDM) and second price Vickrey auctions (SPVA). The paper also investigates whether deviations from the theoretical predictions can be ascribed to a bidding behaviour which is not consistent with standard theories of decision making under risk and uncertainty, namely Expected Utility Theory (EUT) and Subjective Expected Utility Theory (SEUT). This analysis is conducted in HGV and IV settings to examine whether deviations from EUT and SEUT have the same impact on these two domains.
The artefactual field experiment consists of two between-subject treatments and two within-subject treatments. One treatment group is exposed to the BDM, the other to the SPVA. In each treatment group, subjects are exposed to HGV and IV elicitation procedures. In the HGV setting, subjects are exposed to non-monetary lotteries resembling a food fraud incident. In particular subjects participate in auctions for a high-quality seafood product, but there is a chance (known or unknown) that the highest bidder buys a lower quality seafood product instead of the high quality one. In the IV setting, we have standard monetary lotteries involving fictitious goods (tokens).
Original languageEnglish
Publication statusPublished - 11 Jun 2019
Event8th PhD Workshop of the European Association of
Agricultural Economists
- Swedish University of Agricultural Sciences Uppsala, Sweden, Uppsala, Sweden
Duration: 10 Jun 201912 Jun 2019
https://www.slu.se/globalassets/ew/org/inst/ekon/eaae-phd-workshop-program-may-29.pdf

Conference

Conference8th PhD Workshop of the European Association of
Agricultural Economists
Abbreviated titleEAAE 8th PhD Workshop
CountrySweden
CityUppsala
Period10/06/201912/06/2019
Internet address

Keywords

  • Risk and uncertainty
  • Rationality
  • Becker-DeGroot-Marschak mechanism
  • second price Vickrey auctions
  • non-monetary lotteries

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