Browsing by Author "Fooks, Jacob"
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Item Auction versus Posted Price in Experiments: Comparisons of Mean and Marginal Effect(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2017-06) Wu, Shang; Fooks, Jacob; Li, Tongzhe; Messer, Kent D.; Delaney, DeborahEconomic experiments have been widely used to elicit individuals’ evaluation for various commodities and non-market goods. Common elicitation methods include auctions and posted price mechanisms. Experimental auctions are theoretically incentive compatible so are assumed to give an unbiased estimate of individuals’ evaluation including willingness to pay (WTP). However, the vast majority of purchasing decisions are not made in auctions but in market settings, such as grocery stores, where consumers make yes/no decisions in response to a set price. In this research, we carefully design an experiment to compare homegrown-value WTP estimates between an auction and a posted price elicitation format. This design enables us to make both within- and between-subjects comparisons of the mean WTP and marginal effect estimates. Results from 115 adult consumers indicate that WTP estimates obtained from an auction are approximately 32% - 39% smaller than WTP estimates obtained from a posted price mechanism. In addition, we compare the statistical significance and conclude that auctions require a smaller sample size than posted price mechanisms in order to detect the same preference change. Nevertheless, the signs of marginal effects for different product characteristics are consistent in both mechanisms.Item Conserving Spatially Explicit Benefits in Ecosystem Service Markets: Lab and Artefactual Field Tests of Network Bonuses and Spatial Targeting(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-01) Fooks, Jacob; Higgins, Nate; Messer, Kent D.; Duke, Joshua M.; Hellerstein, Dan; Lynch, LoriConserving contiguous areas often enhances environmental benefits. However, most conservation efforts are voluntary, incentive-based, do not reward landowners for contiguity, or select based on contiguity. Thus, achieving optimal contiguity of conserved parcels is unlikely especially with limited budgets. Using laboratory and artefactual field experiments, this paper evaluates two mechanisms in the context of reverse auctions for achieving optimal contiguity: network bonuses and spatial targeting. Results suggest that spatial targeting alone improves the aggregate environmental and social welfare outcomes while network bonuses alone result in worse outcomes. The interaction of the bonus-effect and the targeting-effect is positive, suggesting that in a competitive auction environment that already includes bonuses, adding spatial targeting minimizes the damage.Item Consumer Demand for Local Honey: An Artefactual Field Experiment(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-05) Wu, Shang; Fooks, Jacob; Messer, Kent D.; Delaney, DeborahHow to best target and attract niche market consumers is an important marketing problem for producers of specialty agricultural products. It is particularly an issue in the honey market where consumers increasingly face media messages regarding threats to honey bee health, honey adulteration, and health benefits of locally produced honey. Using auction experiments, this research evaluates consumer behavior related to informational messages about honey that is produced locally, domestically, and internationally. Results from 115 adult consumers show that consumers’ demand for honey varies significantly based on the geographic location of the honey’s production, product packaging, and the information they have about the product. Consumers demonstrate greater demand for locally produced honey, especially when provided information about negative aspects of internationally produced honey that include adulteration. This shows that such negative media attention on specialty products offers small producers an opportunity to increase profitability by marketing themselves as a specialized niche alternative.Item Do Auctions Underestimate Consumer WTP? An Artefactual Field Experiment(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-05) Wu, Shang; Fooks, Jacob; Messer, Kent D.; Delaney, DeborahAuction experiments are commonly used to elicit consumer values for a wide range of items and services. These auctions are theoretically incentive compatible so are assumed to give an unbiased estimate of consumers’ willingness to pay (WTP). However, the vast majority of consumer decisions are made not in auctions but in posted-price settings, such as grocery stores. This study tests whether the two mechanisms yield similar WTP estimates by comparing WTP for honey from a second-price Vickrey auction and the WTP from a posted-price dichotomous-choice mechanism in a within-subject, homegrown-value setting. Results from 115 adult consumers indicate that estimates of WTP generated by an auction are approximately 50% smaller than WTP estimates generated by a posted-price mechanism. We test several potential explanations for this difference in behavior and find no evidence of anchoring or yea-saying effects. The evidence does suggest that the framing of choice in an auction format and a lack of familiarity with auctions are the most plausible explanation for this downward bias.Item Tourist Preferences and Externalties of Views of Wind Turbines(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2016-10-25) Fooks, Jacob; Messer, Kent D.; Duke, Joshua M.; Johnson, Janet B.; Li, Tongzhe; Parsons, George R.Previous research about the potential visual disamenity of wind turbines has used stated preference methods or hedonic studies of home prices. This study uses a field experiment of tourists on a ferry to evaluate the impact of wind turbines on tourism. Tourists are given an opportunity to purchase a chance for a weekend hotel stay that varied in quality and by its distance from and view of a large turbine. Results from a within-subject study of 65 tourists suggest that tourists prefer higher quality hotel rooms, being farther from the turbine (up to 1.5 miles), and views that do not include the turbine. Thus, the placement of on-shore turbines may have a larger negative economic impact that previously estimated.Item Valuing Continuously Varying Visual Disamenities: Offshore Energy Production and Delaware Beach Visitation(Department of Applied Economics and Statistics, University of Delaware, Newark, DE., 2014-01) Fooks, Jacob; Messer, Kent D.; Duke, Joshua M.; Johnson, Janet; Parsons, GeorgeThis research proposes a new approach to measuring and estimating Willingness to Pay (WTP) for a variety of non-market amenities. The continuous variation of attributes present in many non-market goods is utilized to collect higher resolution information on consumers' choices concerning their use decisions than is available through standard dichotomous choice questions. It does this without directly asking research participants to form explicit valuations - an unfamiliar and cognitively challenging task for most consumers. This generates data that can be estimated with a duration, or survival model consistent with Random Utility Theory, from which an expression for WTP as a function of the continuous attribute can be recovered. We apply this approach to estimate Delaware beach visitors' visual disamenity from the presence of offshore energy generation installations.