smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

the effects of induced mood on bidding in random nth price auctions we investigate the effects of mood on decisions in random nth price auctions there are two possible ways in which mood can affect behavior 1 mood can affect the valuation of the object being auctioned or the willingness to pay wtp and 2 mood can affect the bidding behavior itself to identify these two possible effects we study decisions with induced values and with homegrown values our data show that positive mood generates an upward bidding bias in the induced value condition however only under certain conditions do we observe weak mood effects on wtp

winners losers and the nuclear waste dilemma this paper explores how property right assignment affects social efficiency when a public program has both public good and public bad components we show that when willingness to accept a public bad exceeds the willingness to pay the net benefit is unambiguously lower when the property right supports the status quo institutional structure thus kaldor hicks efficiency tests tend to favor public programs and mitigation over the status quo even when mitigation negatively affects another group to illustrate the result we develop social cost estimates for moving nuclear waste from current temporary storage facilities to a permanent central repository at yucca mountain nv usa for a representative city with a population of 226 195 the present value of the external cost of shipping waste is 1 42 billion when those living near temporary nuclear waste storage facilities are assigned the property right to health and safety that number swells to 5 95 billion when those living near the transport route are assigned the property right thus property right assignment affects the efficient level of nuclear waste and thus nuclear energy produced

adverse selection in asset markets theory and evidence from the indian market for cows dairy cows cycle through periods where their quality is more observable the milking phase and where their quality is less observable the dry phase this variation in quality observability creates the potential for an adverse selection problem i develop a theoretical model of trade in dry and milking cows and find empirical evidence consistent with the adverse selection theory in particular dry animal prices fall less in response to negative shocks relative to milking animal prices which is consistent with the model s prediction that negative shocks actually help the dry animal market by pushing more high quality owners to sell

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

estimating the public good value of preserving a local historic landmark the role of non substitutability and citizen information this study applies stated preference methods to estimate the public good values of preservation and restoration of a local historic landmark in a medium sized us city the survey device centres on

moral dimensions of the wta wtp disparity an experimental examination abstract contrary to welfare economic theory empirical evidence suggests that the amount of money people are willing to accept wta to forego a commodity will generally exceed the amount of money they are willing to pay wtp to gain the commodity this paper undertakes an experimental examination of the wta wtp disparity using conventional and ecologically produced eggs the results of this experiment reveal that the difference between the mean wtp and wta for conventional eggs is negligible while the mean wta is more than 1 5 times higher than the mean wtp in the case of ecological eggs an explanation for this result is offered following the boyce et al boyce r b brown t c mcclelland g h peterson g l schulze w d 1992 an experimental examination of intrinsic values as a source of the wta wtp disparity am econ rev 82 1366 1373 notion that an asymmetrical assignment of moral responsibility may cause wta to exceed wtp by comparing the two studies a tentative conclusion is that the valuation disparity is likely to increase with a corresponding increase in the degree of assigned moral responsibility

values elicited from open ended real experiments abstract the idea that preferences are only revealed by real incentives is deeply embedded in economists worldview consequently evidence from hypothetical experiments has not readily permeated economic thinking one method for determining whether hypothetical experiments provide useful information about preferences is to compare them to similar real goods experiments this study looks at responses elicited by three real experiments we examine the proportion of responses that meet a series of criteria that range from a broad appeal of plausibility to a narrow restriction based on quasi concavity of preferences we argue that these proportions are unreasonably low

estimating willingness to pay for improved water quality in the presence of item nonresponse bias this article deals with the problem of item nonresponse in contingent valuation surveys using a payment card method by applying a grouped data sample selection estimation technique that is capable of imputing the missing values conditional upon a respondent s decision to answer a willingness to pay question the advantage of the technique lies in its ability to utilize all of the information in the sample permitting a more efficient estimation in the presence of item nonresponse bias the major determinants of willingness to pay appear to be household income number of children education perception of existing water quality and identification with environmental issues copyright 2003 oxford university press

preference anomalies preference elicitation and the discovered preference hypothesis there is wide ranging evidence much of it deriving from economics experiments of anomalies in behaviour that challenge standard preference theories this paper explores the implications of these anomalies for preference elicitation methods because methods that are used to inform public policy such as contingent valuation are based on standard preference theories their validity may be called into question by the anomaly data however on a new interpretation these anomalies do not contradict standard theory but are errors in stated preference that can be expected to disappear as people become more experienced in relevant decision environments we explore the evidence for this interpretation and what implications follow for preference elicitation methodology

divergence in alternative hicksian welfare measures the case of revealed preference for public amenities this paper investigates the divergence between the two hicksian welfare measures of non traded amenity improvement associated with housing first the hicksian surplus measures for amenity changes are analytically developed based on explicit specification of utility structures a hedonic two stage approach is then applied to empirically show that for quantity changes in contrast to hypothetical markets divergence in real market is small the paper also analytically develops expressions for the income and substitution effects and empirically shows that for a given income effect the greater the substitution effect the smaller the divergence between the two measures copyright 2002 john wiley sons ltd

a test of the theory of reference dependent preferences eight alternative methods of eliciting preferences between money and a consumption good are identified two of these are standard willingness to accept and willingness to pay measures these methods differ with respect to the reference point used and the dimension in which responses are expressed the loss aversion hypothesis of tversky and kahneman s theory of reference dependent preferences predicts systematic differences between the preferences elicited by these methods these predictions are tested by eliciting individuals preferences for two private consumption goods the experimental design is incentive compatible and controls for income and substitution effects the theory s predictions are broadly confirmed

an experimental approach to valuing new differentiated products abstract an experimental store was created to evaluate initial demand for locally produced and guaranteed tender steak products as a more realistic alternative to contingent valuation cv and dichotomous choice experimental methods strengths of the approach are incentive compatibility a realistic consumption set and a familiar choice environment consumers selected among usda choice premium quality lean guaranteed tender and locally produced strip steaks a double hurdle count data model indicated initial willingness to pay wtp for locally produced steak comparable to prior cv results but demand was highly elastic demand for premium quality steak crowded out demand for the guaranteed tender product contrasting with prior dichotomous choice experimental results

a problem with consumer surplus measures of the cost of practice variations abstract estimates of the surplus loss due to physician practice variation measure the area under the shifted demand curve this method is valid only if the unshifted demand curve is derived from the distribution of true ex post values of care if the unshifted demand curve does not reflect the true value of care then the traditional methods of measuring surplus loss can be seriously biased

market experience eliminates some anomalies and creates new ones we report two experiments which investigate whether experience of decision making in repeated markets purges behaviour of preference reversals we investigate two behavioural mechanisms that may be shaping bids in repeated auctions a tendency to adjust bids towards previously observed market prices and a tendency to reduce bids following bad market outcomes we find little support for the former but strong support for the latter also whilst just enough market exposure eliminates the typical preference reversal phenomenon continued exposure fosters the mirror image anomaly therefore although market experience shapes behaviour in our experiments it does not generally promote consistency with standard preference theory

growing their own unobservable quality and the value of self provisioning abstract many important food quality and safety attributes are unobservable at the point of sale particularly in informal markets with weak reputation effects through a framed field experiment conducted in western kenya we show that farmers place a large premium on maize they have grown themselves relative to that available for purchase providing information on the origin of maize and on its taste and safety reduces this gap we conclude that information which is unavailable during typical market transactions is important to how consumers value maize and that imperfect information may contribute to the prevalence of agricultural production for subsistence needs in developing countries

rational risk valuation given sequential reduction opportunities abstract we design experimental auctions with sequential risk reduction opportunities between private and collective self protection or self insurance we reject two hypotheses of rational risk valuation individuals do not prefer self protection to self insurance and the sequencing of private and collective mechanisms matters

cash crop production food price volatility and rural market integration in the third world large farmers in the third world often devote to cash crops a larger share of their land than do small farmers this paper suggests a possible explanation even in the presence of food markets third world farmers food security is best assured by food self sufficiency a model of crop portfolio choice under multivariate risk is used to show that reasonable assumptions regarding risk and preferences reproduce the observed pattern simulations further indicate that food market integration reduces the need for food self sufficiency policy implications are drawn regarding domestic trade liberalization and agricultural technology

insurance market efficiency and crop choices in pakistan this paper tests the efficiency of insurance markets in the pakistan punjab by examining how crop choices are affected by the presence of price and yield risk we estimate reduced form and structural models of crop choices although we cannot reject the hypothesis that village members efficiently share risk among themselves production choices are shown to depend on risk existing risk sharing and selfinsurance mechanisms thus imperfectly protect punjab farmers against village level shocks results also indicate that households respond to consumption price risk thereby suggesting that empirical and theoretical work on risk should avoid putting an exclusive emphasis on yield and output price risk

estimating price discounts for low quality maize in sub saharan africa evidence from benin summary this article uses household data from benin to estimate the extent that markets in sub saharan africa discount damaged maize stated preference methods indicate that a 10 increase in insect damage results in a 9 maize price discount however revealed preference methods indicate that this discount is only 3 discounts are larger immediately after harvest than they are in the lean period when maize is scarce our results help explain why many smallholder farmers sell maize at harvest rather than making the effort to preserve grain of good quality for later in the season when it may fetch a higher price

the separation of ownership and control in the theory of the firm a reappraisal abstract managerialists argue that today s large corporations are either owner or manager controlled this classification is based upon an ex post analysis of shareholdings if no cohesive group of shareholders possesses more than a fixed percentage of shares the conclusion is that owners do not have control which is assumed to pass to managers this paper counters this approach arguing 1 causality runs from control to observed shareholdings and 2 the observed holdings generally suffice to give a subset of owners control in so doing the paper also confronts and rejects the neoclassical approach

industrial organisation the degree of monopoly and macroeconomic performance a perspective on the contribution of keith cowling 1936 2016 keith cowling became a pioneer and key figure in a number of areas in industrial economics including mergers and acquisitions advertising the theoretical determination of structure conduct performance scp relationships and the welfare losses of monopoly power he was informed and motivated by real life challenges of real life people and aimed to find solutions that fostered social welfare by leveraging the power of theory and evidence in mainstream io he was mostly famed for his work on scp and monopoly power building upon this contribution keith also became renowned for being critical of contemporary capitalism arguing that its concentration tendencies rendered it prone to abuse of corporate power and paved the way to stagnation and crises in doing so he provided an insight into how the micro firm and industry level foundations of the industrial economy impacted upon macro economic performance he cross fertilised mainstream and radical approaches to economics and was widely respected for his conceptual mathematical and empirical rigour in this paper we highlight his major contributions in the fields of io international political economy and public policy

understanding the disparity between wtp and wta endowment effect substitutability or imprecise preferences abstract although it is now generally accepted that willingness to accept exceeds willingness to pay disagreement remains as to why this disparity is shown to persist even when controlling for learning substitutability and respondents imprecision thus lending further support for the endowment effect

are adults better behaved than children age experience and the endowment effect we find that large increases in age do not reduce the endowment effect supporting the hypothesis that people have reference dependent preferences which are not changed by repeated experience getting and giving up goods

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

posted prices and bid affiliation evidence from experimental auctions in most experimental auctions researchers ask participants to bid on the same item in multiple po tentially 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 article advances the literature in several im portant ways first we report the design and results of the only study designed specifically to control for the effects of posted prices on bids in subsequent rounds we do this with the aid of confederate bidders who were instructed to bid within a certain narrow range thus we have multiple treatments that vary only by the presence or absence of confederate bidders al lowing for what we believe to be the cleanest possible test of the effect of posted prices on bidding behavior in later rounds while list and shogren 1999 model bids in round t as a function of the posted price in round t 1 through our use of confederate bidders to con trol posted prices we are able to test whether exposure to high posted prices has an effect that accumulates over the course of multiple rounds leading to a gradual increase in mean bids second our methods of analysis are more complete than previous work examining bid af filiation we not only compare summary statis tics from early and late rounds but we also use panel data analysis to understand how in dividual participants bids are affected by the presence of confederate bidders focusing on individuals rather than summary statistics al lows us to understand how individual specific characteristics influence affiliation and it also allows us to better understand the role of out liers

market simulation and the provision of public goods a non paternalistic response to anomalies in environmental evaluation most normative economics assumes that individuals have coherent preferences this paper responds to growing evidence of failures of this assumption particularly in the context of stated preference methods widely used in environmental policy analysis it proposes a non paternalistic concept of consumer sovereignty that does not assume preference coherence is satisfied by competitive markets and can be applied to the provision of public goods a key implication is that decisions should reflect valuations revealed at the point of consumption such valuations which can be inferred from hedonic prices may be less susceptible to willingness to accept wta willingness to pay wtp disparities than those elicited by stated preference methods

tests of market outcomes with asymmetric valuations of gains and losses smaller gains fewer trades and less value abstract the pervasive finding that individuals value losses more than gains suggests that actual gains from trade and numbers of market exchanges may well be much smaller than would be the case if people s buying and selling prices were equivalent as normally assumed the results of two sets of costless market simulations using actual gain and loss valuations show that the actual gains from exchange and trade volumes are less than half of those expected with conventional assumptions and that completion of all pareto efficient exchanges fail by wide margins to shift entitlements to those willing to pay the most for them these findings suggest the valuation disparity has significant welfare implications and may be a major cause of market stickiness

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

towards a political theory of the firm abstract the revenues of large companies often rival those of national governments and some companies have annual revenues higher than many national governments among the largest corporations in 2015 some had private security forces that rivaled the best secret services public relations offices that dwarfed a us presidential campaign headquarters more lawyers than the us justice department and enough money to capture through campaign donations lobbying and even explicit bribes a majority of the elected representatives the only powers these large corporations missed were the power to wage war and the legal power of detaining people although their political influence was sufficiently large that many would argue that at least in certain settings large corporations can exercise those powers by proxy yet in economics the commonly prevailing view of the firm ignores all these elements of politics and power we must recognize that large firms have considerable power to influence the rules of the

comparing open ended choice experiments and experimental auctions an application to golden rice we use two experimental valuation methods to estimate consumer demand for genetically modified golden rice the first is an open ended choice experiment oece where participants name the quantities of golden rice and conventional rice demanded at each of several price combinations one of which will be randomly chosen as binding this allows us to estimate market demand by aggregating demand across participants this estimate of market demand also allows us to estimate own price elasticity and consumer surplus for golden rice comparing willingness to pay wtp estimates from the oece with those from a uniform price auction we find that oece wtp estimates exhibit less affiliation across rounds and the effects of positive and negative information under the oece are more consistent with prior expectations and existing studies we also find that while auction wtp estimates more than double across five rounds oece wtp estimates are stable across rounds and are always roughly equal to those from the final auction round

transactions costs and agricultural household supply response we develop and estimate a model of supply response when transactions costs create a situation where some producers buy others sell and others do not participate in markets we present two rationales for why producing households may have different relationships to the market proportional and fixed transactions costs using data on mexican corn producers we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs revealing that both fixed and proportional transactions costs matter for the estimation the results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs

learning innovation increasing returns and resource creation luigi pasinetti s original sin of and call for a post classical economics we draw on the seminal contribution to economics by luigi pasinetti respond to his call to reverse what he saw as the original sin of classical economists exacerbated by neoclassical economists namely the assumption of non increasing returns to scale and move towards building a post classical economics we outline the contours of a post classical framework that draws on key themes and contributions from pasinetti on learning technical progress increasing returns resource creation trade and catching up and contributions from within and without economics that are in line with lend support to and challenge it we advocate the pressing need and opportune timing for a concerted effort to revitalise ideas from the once vibrant cambridge school of economics and help develop a fresh more pluralist and inclusive post classical economics that cuts across divides and opens up opportunities for a less dismal science

markets and the measurement of value consumer s surplus and the hicksian measures of compensating and equivalent variation have a long history in empirical economic analysis however at both the theoretical and the empirical level economists psychologists and public choice theorists have not been able to reach a significant consensus regarding the usefulness of these measures economic theorists have only recently dissected the differences which exist between alternative welfare measures in a systematic and transparent fashion in willig 1976 hausman 1981 and takayama 1984 the role of income in determining the correct theoretical measurements of compensating and equivalent variations was exposed during this same period of time theoretical results obtained by the psychologists kahneman and tversky 1979 indicated that the fundamental structure of preferences upon which the theoretical economic results are based is flawed the so called prospect theory of decision developed by these authors indicated that measured of welfare based upon payment will differ from measures of welfare based upon compensation because of the fact that individuals will value losses at a greater marginal rate than gains this difference was then predicted to dominate any income effect important in the economist s model finally this period recorded the emergence of many demand revealing processes which provide individuals with appropriate incentives to accurately reveal their preferences as summarized in coursey and schulze 1986 one interpretation of the literature on incentive compatibility suggests a set of well defined guidelines for improving both the accuracy and validity of compensating and equivalent variation measures these differences in professional preferences regarding what is important in improving the accuracy of economic welfare measurements led john

feeding africa s cities the case of the supply chain of teff to addis ababa abstracturbanization is quickly increasing in africa raising important questions on how food value chains to cities function and what the implications of urban growth are for the local food trade and farm sector we study the rural urban value chain of teff in ethiopia by value its most important staple value chain relying on unique large scale surveys at different levels in this value chain we find in contrast to conventional wisdom that value chains are relatively short and that average farmers obtain a high share about 80 of the final consumer price in the major terminal market addis ababa we further find that producer prices decline in line with transportation costs the farther farmers live from the city that seasonal price movements are rather small and that average stock release by farmers is smooth over the year

transport costs and smallholder cropping choices an application to siaya district kenya smallholders regularly devote shares of resources to low yielding food crops than they do to cash crops that have higher market returns in this paper costly exchange is incorporated into an agricultural household model and a numerical nonseparable version of the model is used to show that seemingly inefficient cropping choices of this type in siaya district kenya can be explained as rational food import substitution given high transport costs in product markets improved rural road networks that reduce these costs could abate motives to meet food needs through domestic production and promote specialization that raises farm incomes

valuing an eu animal welfare label using experimental auctions the aim of this article is to determine consumers valuation for an eu animal welfare eu caw label for products providing higher animal welfare standards than the current legal requirements using revealed preference data from random nth price auction mechanism and two auction procedures our results generally suggest that consumers are willing to pay a premium for an eu animal welfare eu caw label for cured ham this finding is consistent in both the endowment and full bidding auction approaches we employed in our experiments conducted in spain the average premium that consumers are willing to pay for a cured ham with the eu caw label ranges between 19 and 23 of the average price of the regular cured ham that is currently available in supermarkets

price discontinuities in an online market for used cars we study the price setting behavior in a competitive market for used cars and provide empirical evidence for coarse information processing based on detailed field data from one of europe s largest online marketplaces for automotive vehicles we document systematic and sizable price discontinuities at salient car age and mileage thresholds the price difference between two otherwise identical cars across registration years where one was first registered in january and the other in december of the previous year is up to five times larger than that between two cars first registered in any two subsequent months within a registration year a similar pattern can be observed in the mileage dimension at 10 000 km odometer marks which is in line with earlier findings in the literature being able to study discontinuities along two dimensions of the same good allows us to further our understanding toward a more general notion of inattentive behavior while our results are compatible with a behavioral model of l

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

is food and drug administration policy governing artisan cheese consistent with consumers preferences abstract united states government policy prohibits the sale of cheese made from unpasteurized milk aged less than 60 days despite contested science behind the policy we use experimental auctions for artisan cheese to estimate the value of pasteurization and age as food safety attributes which is the rationale for the policy we also look at consumers perception of the tradeoff between safety and quality a survey was conducted with participants at farmers markets including experimental auctions and sensory analysis of pasteurized and unpasteurized cheese and questions concerning attitudes about food safety there is no evidence of positive demand for pasteurization and there is no evidence of a tradeoff between safety and quality on average artisan cheese consumers make purchasing decisions based on taste not their attitude toward food safety the results of this study raise questions about the possible extension of a minimum aging period for cheese made from unpasteurized milk

benefit evaluation of the country of origin labeling in taiwan results from an auction experiment this research is aimed at investigating the consumer s preference for food produced in taiwan and the economic benefits for the country of origin labeling cool the study used vickrey second price sealed bid auction to elicit the consumer s willingness to pay wtp for products under cool the study compared the bid functions estimated with tobit model and the premium functions estimated with ordinary least squares ols due to price affiliation it is more reliable to use the estimated premium functions the estimated premiums are 67 5 84 7 and 99 for taiwan products over their alternatives of china olives china oolong tea and vietnam oolong tea respectively the study concludes that enacting and rigorously enforcing a cool law would increase economic benefits to consumers in taiwan and at the same time placing the imported products in the leveled playing field

an alternative framework for evaluating welfare losses in the health care market a recurring theme in the health economics literature is that excess health insurance reduces society s welfare this proposition is considered to be a truism by most health economists feldman and morrisey 1990 report that two thirds of american and canadian health economists surveyed agree with the statement that the level and type of health insurance held by most u s families generate substantial welfare loss due to over consumption of medical services consequently most research in the area has attempted to identify the exact dollar value of this welfare loss in this note i will try to show that the traditional method of calculating welfare losses from excess health insurance is severely flawed because it is based on assumptions about consumer behavior that are not supported by the available empirical evidence furthermore the methodology masks other potentially greater societal welfare losses that are likely to exist in the health care sector and blinds us from seeking the most effective public policy remedies this note suggests an alternative framework for considering welfare losses based on researchers evaluations of medical necessity

farmers subjective valuation of subsistence crops the case of traditional maize in mexico shadow prices guide farmers resource allocations but for subsistence farmers growing traditional crops shadow prices may bear little relationship with market prices we econometrically estimate shadow prices of maize using data from a nationally representative survey of rural households in mexico shadow prices are significantly higher than the market price for traditional but not improved maize varieties they are particularly high in the indigenous areas of southern and southeastern mexico indicating large de facto incentives to maintain traditional maize there

despairing over disparities explaining the difference between willingness to pay and willingness to accept this paper examines the three major explanations for the disparity between willingness to pay wtp and willingness to accept wta observed in contingent value surveys and laboratory experiments a belief that the results must be biased in some fashion hanemann s 1991 substitutes hypothesis and the loss aversion model proposed by tversky and kahneman 1991 starting from the assumption that individuals make utility maximizing choices we develop structural equations that yield parametric tests of the hypotheses within a single non experimental framework the approach is flexible enough to incorporate a variety of functional form and distributional assumptions and can be applied to either data from either open ended bids or dichotomous choice questions the usefulness of the approach is demonstrated using data from a survey that asked both wtp and wta questions the results provide weak support for loss aversion

preferences and the home bias in trade abstract why is there less observed trade than is predicted by neoclassical trade models a home bias in consumption due to preferences can partially explain this using data from a randomly assigned auction mechanism and survey conducted in madagascar respondents willingness to pay for rice of varying quality and origin is investigated by imposing a novel structure on traditional valuation collection methods one finds that consumers will pay approximately 8 more for home grown rice the key result is that consumers place greater value on an item produced in their own country without any tangible reason to do so other than the product s origin this preference based explanation is one piece of the mosaic of factors that cause disproportionate consumption of domestically produced goods this paper provides concrete evidence in favor of structuring trade models to allow for an explicit home bias in preferences

does production labeling stigmatize conventional milk production labeling is a common approach for differentiating otherwise similar products in the marketplace while these labels may convey positive messages to consumers about the new product they may simultaneously stigmatize the conventionally produced product by highlighting perceived problems the net economic result for producers can be negative since consumers may decrease their willingness to pay for the conventional product that dominates the market while the new product has a relatively small market share this experimental research identifies this stigma effect in the case of milk where the introduction of rbst free and organic milk reduces consumers willingness to purchase conventional milk copyright 2009 oxford university press

willingness to pay and compensation demanded experimental evidence of an unexpected disparity in measures of value aside from possible income effects measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent unexpectedly wide variations between these sums however have been noted in survey responses to hypothetical options this paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations the results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure which would appear to call into some question various rules of entitlement damage assessments and interpretations of indifference curves

a selectivity model of household food marketing behavior in sub saharan africa the agricultural household s discrete decision of whether to participate in coarse grain markets is separated here from the continuous decision of how much to sell or buy conditional on participation failure to participate in markets results from high fixed transactions costs a selectivity model endogenously switches households into alternative market participation states correcting for bias caused by the exclusion of unobservable variables affecting both discrete and continuous decisions improved market information increases the probability of participation by sellers while access to cereals processing technology increases quantities transacted by both sellers and buyers conditional on participation

a canonical model of choice with initial endowments we use the revealed preference method to derive a model of individual decision making when the endowment of an agent provides a reference point that may influence her choices this model generalizes the classical rational choice model which views choice as a consequence of utility maximization instead our model sees choice as arising from psychologically constrained utility maximization where the constraints are induced by one s initial endowment in particular this model produces status quo bias as a natural consequence but not necessarily the endowment effect a range of economic applications identify the predictive and explanatory strength of the model in particular we demonstrate that the status quo bias phenomenon reduces the size of the substitution effect in problems of consumption choice

bid sensitivity and the structure of the vickrey auction a research study explored a version of economist w vickrey s second price sealed bid auction used for the valuation of nonmarket goods the sensitivity of revealed values generated by this variation were examined a standard second price auction with repeated market trials was compared to a random nth price auction and a combinatorial private collection auction with sequentially revealed values results showed the consistency of revealed values in a low probability risk scenario