Research Paper on Becker-DeGroot-Marschak Single Response Value Elicitation Procedures: The Impact of Process Misconception: An Experimental Study of Consumer Behavior Using the IKEA Effect

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Title: Becker-DeGroot-Marschak Single Response Value Elicitation Procedures: The Impact of Process Misconception: An Experimental Study of Consumer Behavior Using the IKEA Effect

Abstract: In order to gauge consumer opinions and test relevant hypotheses, consumer researchers frequently use valuation experiments. The Becker-DeGroot-Marschak (BDM) single-response value elicitation procedure is a common technique used in many such experiments. It provides an incentive for the subjects to respond with their true valuation by using a random bid to which the participants’ bid is compared. The participants might not fully comprehend the workings of the bidding process because the “random bid” is not a simple idea. As a result, they might mistakenly think that the bidding mechanism works like a standard auction where the highest bidder wins, leading to biased valuation results. In order to remove the process comprehension bias in BDM valuation experiments, we introduce a comprehension measurement step in this paper. We also talk about how the BDM procedure handles “zero” bidders and its potential effects. The current work demonstrates a positive correlation between participant understanding of the valuation process and the size and statistical significance of prior consumer research results. The findings suggest that if the comprehension level is not controlled, consumer research using a single-response value elicitation procedure, which creates an incentive for the subjects to respond with their true valuation, may not be trusted.

Keywords: subject misconception; pricing experiments; true valuation; BDM auctions

Paper Quality: SCOPUS / Web of Science Level Research Paper

Subject: Economics

Writer Experience: 20+ Years

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