Willingness-to-pay for food safety: an experimental investigation of quality certification on bidding behaviour

Abstract

We study the impact of new information about food safety on subjects' willingnessto-pay for food products, in an experimental setting. We elicit prices using either a second price auction or the Becker-DeGroot-Marschak procedure. There are three stages of bidding. In stage 1, subjects bid for products without any information. In stage 2, public information about health impact is provided. In stage 3, new certified products become available, and subjects bid then for non-certified and certified products. The introduction of certified products induces an asymmetric updating of initial bids, bids for non-certified products are lowered, but bids for certified products remain equal to the initial bids.

Does Taste Beat Food Safety? Evidence From the “Pêra Rocha” Case in Portugal

“…As well, Umberger, et al (2004) used an experimental auction to determine consumer WTP for beef flavour. Experimental markets have become an increasingly popular tool for evaluating consumer preferences for credence attributes since the nineties (Fox et al, 1995;Hayes et al, 1995;Rozan et al, 2004;Hobbs et al, 2006). Credence quality attributes, like food safety have been valuated using the revealed preference approach.…”

“…Due to the concern over the "hypothetical nature" of the stated preferences approaches, research conducted more recently has used experimental economics procedures to elicit WTP for food safety attributes. This technique has been applied to a number of different food safety attributes including reductions in pesticides risk (Roosen et al, 1998;Rozan et al, 2004), pathogen risk , and in the use of food irradiation (Shogren et al 1999). Advantages and limitations of EM in valuing food safety attributes have been discussed in the literature.…”

Market-Based Instruments for the Conservation of Underutilized Crops: In-Store Experimental Auction of Native Chili Products in Bolivia

“…The authors concluded that the inclusion of reference price explains consumer choices better than a simpler model because consumers make comparisons among the prices of different products before purchasing. In order to avoid possible income effects in a multi-product BDM experimental auction (i.e., wealth constraints for subsequent products after bidding for the first product), participants were explained beforehand that even though they are requested to provide a bid for each of the three products, they will be able to buy only one of them, which will be randomly selected at the end of the session [38]. After participants placed their bids and one of the products was randomly selected as valid, participants were requested to randomly draw a selling price (ranging from 5 Bs to 30 Bs).…”

Sustainability Standards and the Reorganization of Private Label Supply Chains: A Transaction Cost Perspective

“…The first driver is connected to the high interest of consumers regarding the safety, quality, and environmentally-friendly attributes of food products [17][18][19]. Second, the context in which firms operate is characterized by increased competition and pressure (due to the globalization of food supply) [7,10,20].…”