Anchoring, information, and fragility of choice experiments: An application to consumer willingness to pay for rice with improved storage management

Authors: SU, LIANFAN - Oklahoma State University; ADAM, BRIAN - Oklahoma State University; LUSK, JAYSON - Oklahoma State University; Arthur, Franklin

Submitted to: Journal of Agricultural and Resource Economics
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 4/15/2017
Publication Date: 5/1/2017
Citation: Su, L., Adam, B., Lusk, J., Arthur, F.H. 2017. Anchoring, information, and fragility of choice experiments: An application to consumer willingness to pay for rice with improved storage management. Journal of Agricultural and Resource Economics. 42(2):255-274. https://doi.org/10.22004/ag.econ.258001.
DOI: https://doi.org/10.22004/ag.econ.258001

Interpretive Summary: Stored-product insects such as the lesser grain borer are generally removed from rough rice during the milling process, so that there should be little effect of that infestation on taste and quality of the milled rice. We conducted actual taste test studies with a consumer panel to see if this was true. We then developed a test to determine if our panelists would pay more for rice if they knew it was being specifically managed to reduce insect infestations. We used two methods for the test, an “auction” where consumers could bid specific prices and choice of two different prices, the higher one reflecting improved management. Results showed consumers may pay a higher price for perceived improvements in rice quality, especially when given specific information as to how the rice was managed to limit insect infestation. Results will be benefit those responsible for developing insect management programs for stored bulk rice, which in turn will benefit consumers by providing them with higher product quality.

Technical Abstract: This study uses experimental auction and discrete choice experiments to determine consumers’ willingness to pay (WTP) for rice with improved insect control and for rice stored using Integrated Pest Management and investigates two potential reasons – anchoring and information – for why some studies have found apparent inconsistencies between two methods. Results indicate that consumers’ average bids in the auction are higher than their WTP from the choice experiments. Further, anchoring in the choice experiment appears to be an explanation for the discrepancy. Providing consumers with more information did not substantially reduce the discrepancy, but did result in consistent preference ordering.