Matthew C. Rousu

Estimating the impact of pictorial health warnings and "plain" cigarette packaging: Evidence from experimental auctions among adult smokers in the United States

OBJECTIVE To estimate differences in demand for cigarette packages with different packaging and health warning label formats. METHODS Adult smokers (n=404) in four states participated in experimental auctions. Participants bid on two of four experimental conditions, each involving a different health warning label format but with the same warning message: (1) text on 50% of pack side; (2) text on 50% of the pack front and back; (3) text with a graphic picture on 50% of the pack front and back; and (4) same as previous format, but without brand imagery. RESULTS Mean bids decreased across conditions (1:

Posted Prices and Bid Affiliation: Evidence from Experimental Auctions

3.52; 2:

The Effect of Initial Endowments in Experimental Auctions

3.43; 3:

Estimating the Public Value of Conflicting Information: The Case of Genetically Modified Foods

3.11; 4:

Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration

2.93). Bivariate and multivariate random effects models indicated that there was no statistically significant difference in demand for packs with either of the two text only warnings; however, demand was significantly lower for both packs with prominent pictorial warnings, with the lowest demand associated with the plain, unbranded pack. CONCLUSIONS Results suggest that prominent health warnings with graphic pictures will reduce demand for cigarettes. Regulators should not only consider this type of warning label, but also plain packaging policies for tobacco products.

Consumer Willingness to Pay for “Second-Generation” Genetically Engineered Products and the Role of Marketing Information

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. Copyright 2006, Oxford University Press. (This abstract was borrowed from another version of this item.)

Estimating the Welfare Loss to Consumers When Food Labels Do Not Adequately Inform: An Application to Fair Trade Certification

We report the results of an experiment designed to test whether initial endowments affect value estimates elicited from experimental auctions. Comparing bids for one unit of a good, two units of a good, and a second unit of a good when endowed with the first unit, we find that willingness to pay for the second unit of a good is, on average, as much as 75% higher when endowed with the first unit. We go on to advance two theories that could potentially reconcile our results with neoclassical consumer theory.

Market Price Endogeneity and Accuracy of Value Elicitation Mechanisms

Environmental groups have become the chief antagonists toward agricultural biotechnology innovations. They demonstrate and disseminate private information with the objective of changing the behavior of consumers and producers. We use experimental auctions with adult U.S. consumers and show that this information reduces significantly the demand for genetically modified (GM)-food products and that it has significant public good value—an average of 3 cents per product purchased, or roughly

Which Deceptive Practices, If Any, Should Be Allowed in Experimental Economics Research? Results from Surveys of Applied Experimental Economists and Students

2 billion annually. We also show that the dissemination of independent third-party information about agricultural biotechnology dissipates most of the public good value of negative GM-product information. (JEL D83, Q18)

Choosing a Cigarette Brand: Determining the Value of Countermarketing Information to Smokers Using Field Auctions

It is generally thought that market outcomes are improved with the provision of market information. As a result, the use of repeated rounds with price feedback has become standard practice in the applied experimental auction valuation literature. We conducted two experiments to determine how rationally subjects behave with and without price feedback in a second price auction. Results from an auction for lotteries show that subjects exposed to price feedback are significantly more likely to commit preference reversals. However, this irrationality diminishes in later rounds. Results from an induced value auction indicate that price feedback caused greater deviations from the Nash equilibrium bidding strategy. Our results suggest that while bidding on the same item repeatedly improves auction outcomes, this improvement is not the result of price feedback.