Abstract
We evaluate the effects of monetary and nonmonetary endowments on willingness to pay (WTP) bids in Becker–DeGroot–Marschak (BDM) experimental auctions. Results indicate that subjects provided with a monetary endowment bid more than those that received a nonmonetary endowment.
Acknowledgements
The authors would like to gratefully thank Professor Jayson Lusk for his constructive suggestions and comments, while absolving him from any remaining errors or omissions.
Notes
1 This study was performed with second price auctions; theoretically, it is formally equivalent to the BDM mechanism (Noussair et al., Citation2004). However several papers have shown that the two methods produce conflicting estimates (Rozan et al., Citation2004).
2 The instructions are available from the authors upon request.
3 Previous scholars have noted that for BDM auctions, practice rounds are not required (Feldkamp et al., Citation2005); therefore, none were used in this research.