Using Experimental Auctions for Marketing Applications: A Discussion

The present article discusses general issues associated with experimental auctions and their relative advantages and disadvantages over other marketing research techniques. Experimental auctions create an active market environment with feedback where subjects exchange real goods and real money, which is not generally the case with other methods. The article also discusses four experimental design issues associated with experimental auctions: auction mechanism, market feedback and bidder affiliation, demand reduction and wealth effects, and multiple attribute valuation. Each of these experimental design issues, if not properly controlled, have the potential to create serious flaws in marketing recommendations.