COMPENSATION FEES AND WILLINGNESS TO PAY: A FIELD EXPERIMENT ON ORGANIC APPLES

Abstract

An increasing number of studies suggest that compensation fees for participating in valuation studies can influence participant’s responses. This study investigates the impact that compensation has on individuals’ responses in a point-of-purchase setting, when the opportunity costs of participation are relatively small and participants are familiar with the products. We conducted a field experiment using the incentive compatible Becker-DegrootMarschak (BDM) mechanism to elicit consumers’ willingness-to-pay values for organically produced apples. Our results suggest that despite receiving similar information, compensated individuals tended to offer willingness-to-pay values that were significantly larger on average than those values offered by non- compensated individuals.

Keywords

• BDM
• compensation fees
• incentive compatible
• organic
• willingness-to-pay