This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
Recent advances in science and technology have delivered sophisticated techniques for almost all the fields for solving versatile problems of human being. One of them is the genetic modification (GM) technology, it is the process of changing genetic constitution of an organism with the help of biotechnology, the organisms produced with the help of GM technology are known as GM organism, and the foods originated from these organism are known as genetically modified food (GMF) (WHO, 2009). The fundamental reason for the application of this technology to food sector is to make desirable changes in the various food attributes as increase in test, flavor, increase in yield, and nutritional value. Currently, opinions around the world for GM foods are very skeptical (Pinstrup and Schioler, 2001). Scientists, research institutes, NGOs, agribusiness companies and food regulatory authorities have unlike impressions about GM food. The Food and Drug Administration observed no difference between GMF and conventional food (FDA, 1992). Agribusiness companies like Monsanto and Syngenta have pro-GMF argument that GM food will help to reduce the world hunger by producing ample food for the developing nations (Council for Biotechnology Information, 2001). Moreover, some researcher argues that cultivation of GM crops around the globe will reduce the pesticide application level and raise the level of environment quality (Johnson, 2002; Qaim, 2003). On the contrary, NGOs like Greenpeace argues that consumption of GM food may cause allergic reactions in human, environmental concerns, and they are suspicious about the market power of the stakeholders involved in GM technology, may be they will behave like monopolist in future (Greenpeace, 2001). Concern to the consumers, despite the expressed benefits of GM food, consumers especialy from Europian nations and Japan have expresed negative attitude towards GM food (Becker, 1999; Burtton et al., 2001; Lusk, 2005; Hall et al., 2006; Dannenberg, 2009). Consumers in developing world and US, have evaluated GM foods as similar or better than conventionally grown foods (De Steur et al, 2010; Kimenju and De Groote 2008; Ganiere et al., 2006; Nelson, 2001; Anand et al, 2007). In the global market, consumers are the final determinants of the success or failure of scientific inventions (Springer et al., 2002). Hence, an understanding of the consumer attitude towards specific scientific invention is very important to understand the future of that invention. The widely accepted theory of formation of consumer attitudes is the Fishbein Multi-attribute model (Fishbein, 1963), which suggests that consumer knowledge about a product and its various attributes defines consumer attitude towards the product. While consumer knowledge level depends on the various types of information, they perceive. The sources of information about GM foods are mass media, friends, scientists, and product labels. In the developed nations like US, UK, Greek, Germany, only about fifty percent of the consumers have shown awareness about GM food (Hallman et al., 2003; Batrinou et al., 2005; Moon and Balasubramanian, 2001; Dannenberg et al., 2008). While consumers knowledge level in the developing countries like China, Brazil, and India, is lower than the developing world (Curtis et al. 2004; Guivant, 2006; Anand et al. 2007). Overall, these findings suggest that consumers around the world have reported low level of knowledge about GM technology and GMFs. In the uncertain environment that most of the consumers have insufficient knowledge about GM technology, we cannot deny that the types of information received from various sources are likely to influence consumer attitude formation about GM foods and eventually willingness to pay for GMFs. In the today's competitive market, it is rational that various firms, organization and stakeholders ever passes around biased or asymmetric information about GM foods, to promote their personal interest, i.e. pro-GM food institutes will always disclose positive information about GM food and vice-versa. Therefore, this study examines the effects of different information formats on consumer willingness to pay for GM food. We have used four different information formats about GM foods: positive information, negative information, both positive and negative together, and no information. This is the first study in India, which have analyzed the effect of four types of information formats on consumer willingness to pay (WTP) for GMFs in uncertain environment. The products chosen for the analysis of effects of information formats on consumer WTP, were processed food products, the reason behind this selection was that plenty of proceeds food products are likely or available in India, which might contain GM ingredients. Therefore, this study will be helpful for the designing of market policy concern to the processed food products, which contains GMFs traces.
Food products containing GM ingredients
The first GMF available for the consumers in market was GM tomato in US around 1994, though this was disappeared after very short span form the market(GMO Compass, 2010), it has started the new food domain. Since then scientists have applied GM technology for the production of most of the food items as fruits, vegetables, cereals, and animals as well, currently only few of them are cultivated on large scale, and more are a doorstep away for the commercial release (James, 2008; IRRI, 2009; IGMORIS, 2009; GMO Compass, 2010). So far, the cultivation of GM crops is limited to only 25 out of 195 nations, and soybean crop represents the highest area under cultivation (James, 2008). Though GM crops cultivation is limited to few nations only, an increasing international food trade due to the globalization will be the reason for the availability of GM foods in the non-GM growing nations. Some of the GM foods are consumed in the natural form as vegetables, fruits and cereals, while in some cases they are processed for various regions as value addition, take few examples as maize (corn), whose one of the processed form is popcorns, fruits are processed in to the juice, jam and jelly, moreover, there are some food products as chocolate and nutrient bar, whose constitute includes different types of cereals, pulses, grains, fruits and many more. Currently an increasing supermarket culture increases the availability of processed and fast food for the consumers in developing countries, while in the developed world most of the available food in the supermarkets are in the processed form (Asfaw, A. 2009; Neven et al., 2006; MacInnis and Rausser 2005; USDA, 1995). Hence, in the supermarket processed GM food products are likely to available in the developing countries. The GM nature of food product is hardly possible to understand with only visible evaluation or even after the consumption of food; Derby and Karni (1993) describe this type of attributes of foods as 'credence attribute'. Therefore, due to this nature of GM foods, a label is the only possible source for the consumer to learn about this attribute of food. Currently available or in use GM food labeling policies are mandatory, voluntary and no labeling policy, which varies nation to nation and moreover in each type the protocols are very different (Gruere and Rao, 2007), further due to this great variation so far there is no universally acceptable labeling policy for GM foods.
In India, recently the government has proposed mandatory labeling policy for all GM food products (Gruere and Rao, 2007), but the implementation is not yet done which is facing a delay, and the implementation is unlikely to be seen in recent future. Currently India imports plenty of food products from US as meat products, edible oils, grains, pulses (USDA-FAS, 2010). While, in the US GM crops are cultivated at very high level as compared to other nations (James, 2008). Hence, we cannot deny the presence of GM traces in the processed food products in Indian market, which comes from US and GM crop growing nations.
For the confirmation about the availability of processed food products in Indian market, which were imported from US, Prior to the final survey, we have visited supermarkets in Delhi and Bangalore. We found numbers of food products were imported from US, as potato Chips from Pringles. Some biscuits, nutrient bars contains soybean.
Effects of information formats on consumer WTP for GM foods
The welfare of biotechnology in food production will understood only after the vast empirical and long-term research about the various concerns of GM foods. Still GM food has to go through plenty of food safety tests, which could take decades from now. However, stakeholders in the production of GM foods have to define the marketing policy as early as possible. Before designing marketing policy for GM foods for particular nation, policy makers have to consider the available body of literature about GM foods. Currently substantial level of research work is available on consumer acceptance and willingness to pay (WTP) for GM food products around the World. Recently Lusk et al. (2005); Hall et al., 2006; and Dannenberg 2009, conducted meta-analysis of the available studies on valuation and acceptance of GM food; they reported a great degree of variation in consumer acceptance and valuation for GM food around the world. We think one of the possible reasons behind the variation in consumer WTP for GM foods is that the consumer around the world confronts different types of information about GM foods, which builds consumers knowledge about GM foods. However, some researcher argues that understanding of any subject or the knowledge level of the particular subject does not translate in to the consumer acceptance level despite this it helps for the consumers to make decision (Frewer et al., 1999; Evans and Durant 1995). Therefore, in this section we will discuss the past studies about the influence of various information formats on consumer WTP for GMFs.
Since many studies have evidenced that consumers' knowledge is an important factor, which determines consumers' acceptance or willingness to pay for food products (Colson and Huffman 2009; Anand et al., 2007; González et al., 2009). Moreover, Lusk et al. (2004a) found that those consumers have good knowledge about GMFs, their willingness to accept or pay does not affect significantly by the various kinds of information consumers receive about GM foods. Nevertheless, the problem with developing countries like India is that consumers have very poor knowledge about biotechnology as well as GM foods (Krishan and Qaim, 2008; Anand et al., 2007). Hence, we believe that in developing countries like India the type of information formats consumers perceive about GMFs will influence consumers WTP for GMFs.
Concern to GM foods, to our knowledge, Frewer et al. (1999) were the first to start research about the information aspect of GM foods, they found that the information source characteristics as trustworthiness of source is an important factor influencing consumers' reaction to the type of information.
Fox et al. (2002), conducted a study in US, in this study they used three information treatments: positive information about irradiation of pork, second negative information about irradiation of pork, third both positive and negative information together. They used Vickrey second price auction mechanism for estimation of consumer WTP. They found that positive information increased consumer WTP for irradiated pork, negative information decreased WTP, while with combined information, the influence of negative information dominated the influence of positive information and eventually the WTP decreased. Further they suggests that negative arguments raised about the modern technologies as irradiation of foods, use of GM technology strongly influences consumers perception and eventually the welfare of new technology, despite the presence of positive information.
Tegene et al., 2003; Huffman et al., 2006; and Rousa et al. (2007) conducted nth price experimetal auctions in 2001 in US. They have analysized the influnce of different informaion formats on consumer WTP for GM and non-GM labeled three food products: vgetable oil, potato, and tortila chips. They uses 6 informaiton formats about GM foods: positive, negative, both positive and negative togather, positive plus third party verifiable information (views of scientist, professionals and religious leaders), negative plus third party verifiable information, positive and negative plus third party verifiable information. They found that when consumers were recived positve information about GM foods they bid higher for two out of three GM labeld foods than plane labeld, for negative information consumer purchased GM labeld foods at 34-38% discount, for both negative and positve information consumer bid more for plane labeld foods. when negative and third party verifiable informaiton was given consumers purchsed GM foods at 17-22% discount. When consumers were endowed with positive information they bid more for GM foods than plane labeld foods, when consumers were endowed with positve and third pary verifiable informaton they bid more for plane labeled foods than GM foods. when consumers were endowed with all imnformaiton togather they bid more for two plane labeld foods than GM foods. for the all sample togather they found that consumers were WTP pay around 14% price premium for plane labeld foods than GM foods. finallly they argues that verifiable third party information have a strong influnce on consumers WTP for GM foods, which is likely to help acceptance of GM foods. and also they argue that consumers with prior knowledge about GM foods demands more discount to buy GM foods than those with weak GM knowledge.
About the benefit of GM foods Lusk et al. (2004a) conducted a study for US, England and France sample. They employed a fifth price auction machansim for estimation of WTP for GM cookies. Four information treatments were employed; envirnomental benefit, health benefit, world benefit and no informaiton. They found that all these beneficial information formats increases consumer WTP for GM foods, but the degree of influnce varies according to the ifnformation formats and across the locations, they also found that consumers prior attitude is important, as they found that those consumers have prior negative attitude about GM foods, their attitude after receving of positive information formats was not changed, moreover they also found that the influnce of specific information formats varies across the location, which suggests that uniform information formats generates different responses among the consumers.
Li et al.(2004) employed as double bounded contingent valuation method for the estimation of US consumers response to GM beef which have no genetic problems; the beef derived from the cattle which was feed on GM maize, which have farmer and envirnoment benefits. This information was provided to half of the respondents. They found that those consumers were percived this information were WTP more for GM beef. Frther they argue that pro-GM infromation about GM foods may help to increase consumer WTP for GM foods.
Martinez-poveda et al. (2005; 2009) conducted a study for Spain consumers about consumers willingness to accept GM foods. in this study they found that around 60% of the consumers look for the information on food products. further they found that most of the consumers prior attitude does not change by positive and negative information togather, for very few consumers it changes but only in negative direction, which suggests that consumers put more weight on ngeative than positve information when consumers recive them togather. Moreovere thay also found that healt benefit information have higher positive influnce on acceptance of GM foods than envirnomental benefits.
Li et al. (2002) conducted a study in china for the analysis of Chines consumers WTP for GM rice and soybean oil. They found that most of the consumers have positve opinion about biotechnology and which have positve influnce on WTP for GM foods, consumers positive opinion towards biotechnology was due to the positive media coverage about use of GM technology in agriculture sectore. While in other study in China Hu et al. (2006), analyzed consumer WTP for GM soybean, they used three information formats positive and negative and no information formats derived from the real media coverage, they found that positive information increases WTP, and negative information decreases WTP with a very high degree as compared with the influence of positive information.
Scholderer and Frewer (2003) used four information formats: Balanced information, product-specific information, conventional product advertising information and no information as a baseline. They tested whether consumers' attitude and product selection changes due to the different types of information consumers' received. They used four types of two-food products beer and yoghurt including one type as a GM, the sample used was from Denmark, Germany, Italy, and the United Kingdom. They found that all the information formats failed to alter consumers' prior attitude. While, all the information formats influenced consumers GM food product selection negatively; the information formats significantly decreased consumers' likelihood to select GM foods.
Depositario et.al (2009) conducted uniform-price auctions for golden rice in Philippines for student sample. They used four information formats, positive negative, both together and no information. They found that consumer placed highest bid for positive information followed by no information, negative information and combine information. While the difference between the influence of positive information and no information was not high, hence they suggest that positive information about GM foods does not increase WTP with very high degree.
The avilable literature about the effects of different information formats on consumer WTP for GM foods is lacking on developing countries. Concern to India, so far only one study is avialble by Anand et al. (2007); they analysed the effect of four information formats: consumer friendly, producer friendly, negative infromation and no information on consumer WTP for chapatti (indian bread) made from GM wheat. For estimation of consumer WTP they employed double bounded contingent valuaiton method. They found that consumers with no information were willing to pay about 7% price premium, for consumer friendly information 23% premium and for producer friendly information 10% premium, while for negative information consumer demanded high discount of 139%.
Further, we are also interested to see how an influence of information formats on consumer WTP for GM foods varies according to the consumers' disposable income for buying specific food product. For this, we will endow consumers with different amount for biding during the auction experiment. Use of endowment mechanism raises various questions. So far in several studies researchers have endowed consumers with the food products and then asked their WTP to upgrade the better products (see e.g., Lusk et al., 2004; Lusk et al., (2001b) Fox, 1995; Hayes et al., 1995). The advantage of the endowment mechanism is that it helps to attract participants for experiment and engage consumers during the biding process in experiment (Fox, 1995; Lusk et al., 2001a). While, the critics about the endowment with product is associated with the risk of in-kind endowment effect, which means that consumers value the food product which is belong to them than they want to buy (Thaler 1980), hence endowing food product likely to give biased results. The possible biasness is likely to avoid by endowing consumers with some amount of money instead of any food products (Lusk and Schroeder, (2002), Corrigan and Rousu, 2003). Concern to GM foods, Huffman et al. (2004); Rousu et al., (2005); and Bansal et al. (2010), endowed consumers with certain amount of money prior to experiment instead of any substitute as non-GM food products. Moreover, endowment with money likely to face house money effect as described by Thaler and Johnson (1990). According to them consumers' are likely to bid high when they receive money for biding in auctions, which will lead to biased results. This biasness will not rise in our experiment because we are going to conduct experimental auctions for both GM and non-GM food products one after another. In our experiment if the house money effect arises, it will arise for both the food products and eventually it will nullify because for final discussion we will compare the difference in WTP between both the products.
The literature reports that most of the past studies have employed experimental auctions and contingent valuation method to measure the effects of information on consumer attitude. The information formats used were positive information (positive health, positive environment, produce friendly, consumer friendly), negative information (negative health and negative environment), and third party verifiable information about GM foods. Though there is a huge difference in the findings of the past studies, there are some common findings. When consumer receives negative information, they demanded certain amount of discount to choose GM foods. For positive information, consumers were willing to pay a premium. The health information has higher influence than the environmental. Overall, negative information have influence with high magnitude as compared with all other information formats. In developing countries like India and China consumers were willing to pay premium for GM foods when no information and positive information was provided but when negative information was provided, consumer demanded very high discount to consume GM food.
The huge success of GM cotton in India: around 8.5 million hectares area is under Bt cotton cultivation (Clive, 2009), from this we can not deny the availability of GM foods in Indian market in coming years. In a recent study (Anand et al. 2007) for Indian consumers, they have analyzed the effects of various information formats on consumers WTP for GM chapatti. In this study, they have analyzed the influence of positive and negative information, while combine (positive and negative) information format was not included. Therefore, we extend this study with inclusion of combine information format.
Consumers needs few rounds of auctions to understand the concept …so we have conducted 1 pre experiment round……..Shogren et al., 1994 Hayes et al. 1995).
For endowment effect see Kahneman et al., 1990……. Lusk et al., 2004
While writing about training prior to the exper REF…… methodology para 2 … Noussair, C., S. Robin, and B. Rufiiew
The most difficult and important task while analysis of consumer valuation of the nonmarket good is the selection of an appropriate valuation mechanism. The available methods for the estimation of consumer WTP for any object or product are experimental auctions (EA), contingent valuation (CV), conjoint analysis (CA), hedonic price, and recently emerged real purchase experiments. To our knowledge most of these methods are commonly used in the past studies for the valuation of novel food products and food attributes except hedonic price; for detail description of these methods (see e.g., Lusk and Hudson, 2004; Lee and Hatcher, 2001; Powell et al., 2003; Glogger, 2009; Knight et al., 2005 and 2007). Every valuation method have its pros and cons. Lee and Hatcher (2001) argue that the CV methods are the most commonly used and cost effective techniques, while Lusk and Hudson (2004), and Fox et al. (1995) argue that experimental auctions are always better than the hypothetical estimation methods because in these methods consumer experiences market identical situation and the exchange of real goods and money took place, moreover, Lusk et al. (2005); Hall et al., 2006; and Dannenberg (2009) in the meta analysis of the GM food valuation studies available then found that consumers overstate WTP in hypothetical methods than non-hypothetical. Though the experimental auction mechanisms are costly, they deliver a precise WTP, hence are getting more popularity (Lee and Hatcher, 2001). While recent argument is that the real purchase experiments, in which consumers are offered novel food products at different selling locations as food stalls on the roadsides and selling counters on a farm, provides accurate WTP for the novel food products than any other methods (Powell et al., 2003; Glogger, 2009; Knight et al. 2005 and 2007). Despite the benefit of real purchase experiment, we were unable to use this method because of the on going discussion about legal and controversial issues of GM foods in India, which has caused strong protest against GM foods by NGOs and farmers associations (Scoones; Greenpeace, 2008). Therefore, we have selected experimental auction mechanism to estimate consumer WTP for processed GM food products, and for the analysis of how different information formats affect consumer WTP.
The available literature concern to the experimental auctions reports use of various mechanisms as: English, nth price, Vickrey auction, ascending-bid second price, first price, fifth price, BDM auctions and combinatorial private-collective auctions, Dutch auction, Vickrey-Clarke-Groves (VCG) auction. For the detail description of these methods (see e.g., Lusk et al., 2004; Lusk et al., 2001a; Lusk et al., 2001b; Melton et al.; Rutström; Shogren et al., 1994; Makowski and Ostroy, 1990; Vickrey, 1961; Clarke, 1971; Groves, 1973). Moreover, there are some popular mechanisms like eBay proxy auction, Google Ad Auction and online auctions, which are in principle based on the earlier motioned mechanisms. The criteria for the selection of a valuation method should be the incentive compatibility of the valuation mechanism (Lusk and Hudson, 2004). Therefore, according to this criterion the BDM, nth price, English, and Vickrey auctions are non-hypothetical incentive compatible methods (Lusk et al., 2004; Lusk, 2003). Moreover, for the structure, advantages and disadvantages of these methods see: Lusk et al., (2004) and Lusk, (2003). From these four incentive compatible popular auction mechanisms, we have selected Vickrey second price auction. We will discuss this method in detail in next section. The reasons behind the selection of this method were simple to understand for the consumers, demand revealing, and easy for the implementation (Alfnes 2007; Lusk, 2003), moreover, this method provides truthful willingness to pay and is incentive compatible (Vickrey 1961; McAfee and McMillan 1987; Karni and Safra 1989). Further, our main objective was to understand the effect of different information formats on consumer WTP, not an estimation of consumer WTP; hence, the selection of valuation mechanism was not big concern. The past findings report that the estimations are higher in second price auctions than the other methods (Lusk et al., 2004). To avoid this problem we have valued both GM and non-GM foods alternatively. By doing this we expect that if Vickrey second price auction method reports higher WTP, it will report higher WTP for both the food products, hence the difference in WTP between both the products will be truthful and not very high as argued by Lusk et al. (2004).
Vickrey second price auction mechanism
Most of the economist believes that William Vickrey was the first who invented second price auction (Milgrom, 1989; McAfee and McMillan, 1987), which got the name of Vickrey after his article on this method in 1961, in which he provided a description about the efficiency and applicability of this method (Vickrey, 1961). Recently, Lucking-Reiley (2000) published a article in which he have described about the history of second price auction, where he motioned that the theoretical proof, efficiency and the description provided by Vickery(1961) is of great degree, but the credit as the inventor of this method should not goes to him. He gave a reason that this method has been in use since 1893, Wainwright and Lewis were the first who employed this method for auctions of Stamps in Massachusetts, US (Wainwright and Lewis, 1993). Despite the argument by Lucking-Reiley about the invention, presently this method is in use as Vickrey auction. Currently, various forms of Vickery auctions are in use as ascending price Vickery auction (Mishra and Parkes, 2007; Cramton, 1998), Vickery auctions with reserve pricing (Ausubel and Cramton, 2004), Ausubel/dynamic Vickery auction (Ausubel, 1997; Kagel and Levin, 2001). Here we will discuss only about Vickery second price auction mechanism.
The experimental procedure is quiet simple for Vickrey auction. The research agent calls all the participants in an experimental hall or at any place where the participants feel comfortable and where the carrying out of the experiment is possible without any disturbance. The agent informs the participants about the experimental procedure before the beginning of the real experiment, sometimes conducts dummy trials for other products prior to real experiments. In this method, All the participants are asked to bid simultaneously for the given good and submit their bids in sealed form to the agent, communication between all the participants is not possible while bidding, so that no one will be aware about the others bid, which will avoid formation of a collusion among the bidders. Then, the agent collects all the sealed bids, organizes them in to a descending order, and declares the winner who offers highest bid. While the highest bidder pay the amount equal to the second highest bid and get the product. The other participants did not get the product and pay nothing.
Use of Vickrey auctions in pasts
According to literature, as argued by Lucking-Reiley (2000) Wainwright and Lewis were the first to use Vickery auctions for Stamps in US around 1893. While after the Vickrey's famous article in 1961, the use was begun generally for financial purposes as evidences show that around 1973-74 this method was used for the sales of the Treasury bonds in US (Rothkopf, 1990). While, around 1988 some companies used it for repurchase of their own stocks from the market (Jacobs, 1988). Moreover, the use in other fields as sales of spectrum licenses in New Zeeland begun around 1990 (McMillan, 1994). Concern to food sector, as per our knowledge the use of second price auction for valuation of food products (as safe meal, irradiated food, beef cuts in vacuum package, candy bars, coffee mugs, wine), food packaging, food quality and for food safety issues started after 1980. For detail, see (Coursey et al., 1987; Menkhaus et al., 1992; Shin et al., 1992; Buhr et al., 1993; Hoffman et al., 1993; Shogren et al. 1994; Shogren et al., 1994a; Hayes et al., 1995; Melton et al., 1996; Roosen et al., 1998; Lecocq et al., 1999; List and Shogren, 1999). Currently, second price auction mechanism is popularly for the valuation of quality or novel food products, sales of electronic goods, digital goods as e-books, music, sales of spectrum (Alfnes , 2009; Alfnes and Rickertsen, 2003; Umberger and Feuz, 2004; Rozan et al., 2004; Chen and Takeuchi, 2009; Naldi and D'Acquisto, 2008; Shih et al., 2007; Rodriguez et al., 2006; Anandalingam, 2001).
Use of GM technology in food sector started around 1990 (WHO, 2010), since then research about consumer acceptance and valuation of GM foods begun, different valuation methods as contingent valuation, choice experiments, online survey, phone interview and experiential auctions were employed (Dannenberg, 2009; Hall et al., 2006; Lusk et al., 2005). As per our knowledge, Hoban and Burkhardt (1991) were the first to conduct a study in 1990 about consumer acceptance of GM meat products. While, in 1992, Buhr et al. (1993) employed Vickery auction mechanism for first time for the valuation of meat produced with the help of GM growth hormones in US. Since then plenty of studies have employed Vickrey auction mechanisms for valuation of GM foods: GM corn flakes in France (Noussair et al., 2002), GM corn chips in US (Lusk et al.,2001), GM milk in US (Fox et al., 1994), GM Potato chips, tortilla chips, and milk chocolate in US (Bernard et al., 2006) and GM Canola oil in Japan (Kaneko and Chern, 2005).
Concern to the effect of information on consumer WTP for GM foods few studies have employed second price auction mechanism.(need to put some refrances)
The surprising results were found in Brtian, that different types of information have no influnce on consumer attitude towards GM foods Frewer et al. (1999).
As we have discussed in last section, we have used Vickrey second price auction mechanism for the analysis of consumer WTP. Our prime object is not to analyze consumer WTP, rather how the different information formats influences consumer WTP. In experimental auctions real buying and sealing of food products is must. The selection of food products was really a big task because currently labeled GM food products are unavailable in India. While plenty of food products are available in Indian market, which comes from USA. Currently USA ranks first in cultivation of GM crops (James, 2009), hence we can not deny the presence of GM ingredients in some processed food products imported form USA, as nutrient or chocolate bar whose ingredients are soybean. Prior to the experiment auction, we visited different supermarkets in Delhi and Bangalore, where we found plenty of processed food products imported from USA. We have selected two food products soya-chocolate bar and potato chips. The reason behind the selection of these two food products was that students (our target sample) are regular buyers of these two food products; hence, they are much familiar with these foods. We have purchased these food products from the market and then repacked, and then we labeled them as GM and non-GM soya-chocolate bar and potato chips, we did this to avoid brand biasness. The labels contain only information about GM nature of food. The chocolate bar was 50 gram and potato chips packet was 138 gram.
For the details about the sample selection and other issues about the data collection, see chapter 2.3. Since our target sample was university students. We have conducted experimental auctions at two universities in India: Jawaharlal Nehru University, Delhi and Bangalore University, Bangalore. The auctions locations were as university campus at different locations as university cafeteria, student hostels, and near to different institutes. The numbers of participants in each auction were around 6 - 9. For details about the experimental procedure, please see the figure 4.1. As shown in the figure each experimental auction consists of 1-9 steps.