Experimental Economics and the Environment: Eliciting Values for Controversial Goods

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Experimental Economics and the Environment: Eliciting Values for Controversial Goods Powered By Docstoc
					Experimental Economics and the
Environment: Eliciting Values for
Controversial Goods
Jason F. Shogren, Gregory M. Parkhurst, and Darren Hudson
                We illustrate the experimental method by examining bidding behavior for controversial goods,
                i.e., goods in which bidders have positive and negative values. Our results suggest that bidding
                behavior differs across auction type. Bidders with positive induced values bid sincerely in a
                WTP auction. Bidders bid conservatively, however, in the WTA auction, foregoing profitable
                opportunities. Informing bidders of their optimal strategy serves to attenuate bidding discre-
                pancies but does not eliminate them. Treating the WTP and WTA auctions as equivalent given
                positive and negative values could lead one to overstate the costs relative to the benefits of the
                controversial good.

                Key Words: experiments, w
				
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