Modeling Consumer Bidding Behavior on Food Items : Application of a Two-Stage Sequential BDM Field Experiment

A two-stage sequential experiment was conducted in a retail grocery setting to elicit willingness to pay for 19 four food products. In this article, we examine how bidding behavior over choices for food items, using the 20 demand-revealing BDM experimental auction mechanism, is influenced by bidding on a single item vs. 21 bidding for multiple items simultaneously. In the first bidding round participants bid on one of the four 22 products, while in the second round participants bid simultaneously for the other three products. Econometric 23 analyses are performed using single-equation regression models (Powell's SCLS, OLS, Tobit I and Tobit III) 24 and the SUR system approach. Results suggest that bids are sensitive to the context of bidding. Compensation 25 has little impact on individual's bidding decision. However, there is some evidence that the uncertainty about 26 which product will be binding in the second round, or the round order, can have an effect on participants' 27 bidding decisions