Doctoral Dissertations

Date of Award

8-2014

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Economics

Major Professor

Christian A. Vossler

Committee Members

Scott M. Gilpatric, Michael K. Price, Christopher D. Clark

Abstract

This dissertation is comprised of three papers in the field of microeconomics. The first examines bidder’s choice auctions using both field and laboratory experiments. The field experiments demonstrate that traditional bidder’s choice auction theory does not always hold; the laboratory experiments subsequently isolate several characteristics of this auction format to explain why. We find that while price revelation does not impact the revenue superiority of the auction mechanism, multi-good demand significantly reduces the revenue premium. Intuitively, risk aversion plays less of a role when bidders have the opportunity to win multiple goods. The second chapter is theoretical and presents a dynamic Markov labor market tournament in which the manager does not have the ability to incentivize agents using money. Instead, the manager can use task assignment to reward and punish agents who are in and out of favor with him. This situation frequently characterizes public organizations such as schools and government agencies. The prize of the tournament is the difference between groups in the present value of the agent’s expected utility. We show that when the manager must delegate a certain number of tasks and when agents’ cost of contractible effort is a convex function, the manager can incentivize optimal non-contractible effort by agents. However, the total cost to the manager is higher than if the manager was able to use monetary incentives. The third chapter is an experimental paper that elicits consumer willingness to pay for food products labelled “natural”. The “natural” label is not regulated in the United States; however, several manufacturers are currently under lawsuit for selling “natural”-labelled food that contains genetically modified ingredients. This study uses an incentive-compatible mechanism and a survey to connect consumers’ beliefs to the premium that they associate with the “natural” label. Primarily, we find that consumers who believe “natural” means “no genetically modified organisms” (42% of our sample) are willing to pay a premium for “natural” food, whereas consumers who do not have this belief actually exhibit a negative premium. The overall effect is near zero, although the identified heterogeneity suggests that “natural” labels are potentially misleading.

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