Reputation Selling in Feeder Cattle Teleauctions

Abstract

Recent research to identify significant factors that influence feeder cattle prices has focused on cattle and market characteristics. The research reported here used data from Georgia teleauctions during the 1977 to 1988 pe¡ to determine the possible impact of seller's reputation on price. Both significant premium and discount seUers were identified for two of the three teleauction organizers. Theteleauctionorganization that transferred the least amount of information about the cattle had the greatest number of reputation sellers while the organization with the most information about sellers' cattle given to buyers registered no significant seller reputations. Reputations can help buyers estimate quality in the absence of complete information.Most research identifying significant factors influencing feeder cattle prices has focused on cattle and market characteristics (Buccola, 1980(Buccola, , 1982Schroeder et al.;Lambert et al.;Turner et al.;Bailey et al.). These studies have investigated price determination in traditional, telephone, and video auctions and explained much of the variation in feeder cattle price. Little research has focused on reputation trading. Shapiro explored price premiums as returns to reputations where, nThe idea of reputation makes sense only in an imperfect information world" (Shapiro p. 659). On the other hand, Sporleder used experimental economic methods to investigate the effect of buyer's reputation on exchange prices.The purpose here is to extend research on feeder cattle price determination to include the possible impact of seller's reputation on price. This research is an empirical integration of feeder cattle price determination and reputation trading research. Many of the factors hypothesized to influence feeder cattle prices in Turner et al. are also used here.

Estimating the value of "Source Verification" in Iowa feeder cattle markets

“…Regression analysis employing varying specifications has been used. Turner et al (1993) in their study of reputation selling in feeder cattle teleauctions used an Ordinary Least Square (OLS) model to regress prices on market, lot and cattle characteristics, and the reputations of the seller. Schultz and Marsh (1985) used a quarterly econometric model to study price differences between steers and heifers.…”

“…Thin and very thin cattle receive no significant discount compared to the average feeder cattle in the spring but are discounted in the fall. Herefords received premiums, whil e Brahmans were discounted (KSU, 1996;Schultz and Marsh, 1985;Turner et al . 1993 ;Buccola, l 980;Parcell et al 1995;Schroeder et al1988).…”

“…Slaughter steer price tends to be significant in determining the prices of steers and heifers. According to Schultz and Marsh (1985) it represents the value of output to feedlots, thus changes affect placement demand for feeders (KSU, 1996;Turner et al 1993;Bucco la, 1980;Schroeder et al 1988;Schultz and Marsh, 1985).…”

“…Shapiro (1983) concluded that reputation makes sense only in an imperfect information world. Reputations can help buyers estimate quality in the absence of complete information (Turner et al 1993). Turner et al (1993)…”

“…Reputations can help buyers estimate quality in the absence of complete information (Turner et al 1993). Turner et al (1993)…”