Cognitive biases and design effects in experimental auctions

Abstract

Purpose – Experimental auctions are widely used as a non-hypothetical value elicitation method to examine consumer preferences for novel, controversial foods. However, despite its advantages over hypothetical methods, its practice might lead to a wide variety of biases. The purpose of this paper is to provide a list of key cognitive biases and design effects in food auction research and to deliver scientifically underpinned procedures in order to assess, control and reduce them. Its applicability and relevance is examined in auctions on willingness-to-pay for folate (GM) biofortified rice. Design/methodology/approach – Based on auction literature, a list of 18 biases has been developed. Experimental auctions were conducted with 252 women from Shanxi Province, China to test the occurrence of eight biases, while demonstrating measures to reduce the risk of ten biases. Findings – The results lend support for three information-related effects, i.e. confirmation bias, conflicting product information effects and a primacy bias, but not for a multiple-good valuation effect, a panel size effect, a trial winner effect and time-related sampling biases. Furthermore, there are no clear indications of social desirability bias, auction fever and a false consensus effect. Research limitations/implications – This study emphasizes the need to take into account, and measure the risk of various biases when developing, organizing and interpreting experimental auctions. Future research should further extend the list of biases and validate the study findings. Originality/value – By using a highly topical subject, this study is one of the first to address the potential risk of cognitive biases and design effects in experimental (food) auctions.