Assessing Consumers' Willingness to Pay for Different Units of Organic Milk: Evidence from Multiunit Auctions

Experimental auctions are normally conducted using single-unit auctions. In this paper, we use the multiunit Vickrey auction to assess the determinants of consumers' willingness to pay (WTP) for organic milk in a multiunit shopping scenario. We also analyze the effect of positive and negative information about organic farming on WTP. Our results suggest that consumers are willing to pay a premium for organic milk but that this WTP decreases with the number of units purchased. Results also suggest that health issues, high price of organic foods, taste, and lack of information on organic foods are factors that influence WTP for organic milk. The type of information provided also plays a relevant role. Specifically, we found that subjects' WTP responds positively to positive information about organic farming and responds negatively to negative information. The provision of both positive and negative information does not affect WTP.