Valuing Food Safety in Experimental Auction Markets
Hayes, Dermot J.; Shogren, Jason F.; Shin, Seung Youll; Kliebenstein, James
American Journal of Agricultural Economics Vol. 77 no. 1 (February 1995): 40-53.
In this paper, we value food safety in a nonhypothetical setting - experimental auction markets. First, subjects underestimate the relatively low probabilities of food-borne illness. Second, measures of value are within a relatively fiat range across a wide range of risks, even with repeated market experience and full information on the objective probability and severity of illness, suggesting subjects rely on prior perceptions. Third, marginal willingness to pay decreases as risk increases, suggesting that the perceived quality of new information can affect the weight the individuals place on the information. Finally, pathogen-specific values seem to act as surrogates for general food safety preferences.Published Version