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Household Production And The Demand For Food And Other Inputs: U.S. Evidence, Wallace E. Huffman 2016 Iowa State University

Household Production And The Demand For Food And Other Inputs: U.S. Evidence, Wallace E. Huffman

Wallace Huffman

The paper develops a new productive household model and a consistent household fullincome/ expenditure demand system for inputs and leisure of U.S. households. The demand system is fitted to U.S. annual aggregate data over the last half of the 20th century and findings include that the price and income elasticity of demand for food-at-home are roughly two times larger than for food-away-from-home and that food-at-home and away-from-home are substitutes. The price and income elasticity of demand for men’s unpaid housework are twice as large as for women’s unpaid housework and women’s and men’s unpaid ...


Consumer Demand For Potato Products And Willingness-To-Pay For Low-Acrylamide, Sulfite-Free Fresh Potatoes And Dices: Evidence From Lab Auctions, Katie Lacy, Wallace E. Huffman 2016 Iowa State University

Consumer Demand For Potato Products And Willingness-To-Pay For Low-Acrylamide, Sulfite-Free Fresh Potatoes And Dices: Evidence From Lab Auctions, Katie Lacy, Wallace E. Huffman

Wallace Huffman

We assess consumer demand for traditional fresh potatoes and processed potato products and willingness to pay for new experimental low-acrylamide and sulfite-free potato products. Demand for fresh potatoes, potato chips, and fries is unaffected by household income or education, but demand for chips and fries is affected by consumer age and exercise habits. Subjects display increased willingness to pay for new potato products after receiving a private company perspective about the technology and risks associated with exposure to acrylamide, a carcinogen, in fried conventional potatoes and a new product, potato dices. We find that consumers are willing to pay for ...


The Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food, Matthew Rousu, Wallace Huffman, Jason F. Shogren, Abebayehu Tegene 2016 Iowa State University

The Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food, Matthew Rousu, Wallace Huffman, Jason F. Shogren, Abebayehu Tegene

Wallace Huffman

Two interested parties dominate the current debate on genetically modified (GM) foods: environmental groups and agribusiness companies. For the average consumer to arrive at an informed decision on these new foods, they must rely on information from interested parties. Unfortunately, information from interested parties does not provide an accurate picture of the benefits and risks of new products. This paper examines the effects of information on consumers’ demand for new food products, GM-foods, in an environment where information from one or more interested parties is provided. We design and conduct laboratory auction experiments using randomly chosen adult consumers from two ...


Who Do Consumers Trust For Information: The Case Of Genetically Modified Foods?, Wallace Huffman, Matthew Rousu, Jason Shogren, Abebayehu Tegene 2016 Iowa State University

Who Do Consumers Trust For Information: The Case Of Genetically Modified Foods?, Wallace Huffman, Matthew Rousu, Jason Shogren, Abebayehu Tegene

Wallace Huffman

To be effective, groups that disseminate information need trust. When different groups provide conflicting information on a new product or process like genetically modified (GM) foods, we hypothesize that consumers place different levels of trust in the sources and trust is related to their income, personal and social capital, and prior beliefs. A random sample of adults was asked to state their preferences for sources they would trust to provide verifiable (i.e., objective) information on genetic modification. Their responses were grouped into six categories, and a multinominal logit model used to explain relative trust in information sources. Relative trust ...


The Effects Of Prior Beliefs And Learning On Consumers’ Acceptance Of Genetically Modified Foods, Wallace E. Huffman, Matthew Rousu, Jason F. Shogren, Abebayehu Tegene 2016 Iowa State University

The Effects Of Prior Beliefs And Learning On Consumers’ Acceptance Of Genetically Modified Foods, Wallace E. Huffman, Matthew Rousu, Jason F. Shogren, Abebayehu Tegene

Wallace Huffman

New food products using genetically modified crops appeared in U.S. supermarkets starting in 1996, and consumers’ perceived some risks. This paper examines the role of consumers prior beliefs about genetic modification and of diverse, new information on their willingness to pay for foods that might be genetically modified. We use data from economics experiments and show that participants who had informed prior beliefs discounted GM-labeled food products more highly than those who had uninformed prior beliefs. Uninformed participants were especially susceptible to information from interested and third parties. In contrast, informed participants were generally not affected significantly by new ...


Should The United States Regulate Mandatory Labeling For Genetically Modified Foods?, Wallace Huffman, Matthew Rousu, Jason F. Shogren, Abebayehu Tegene 2016 Iowa State University

Should The United States Regulate Mandatory Labeling For Genetically Modified Foods?, Wallace Huffman, Matthew Rousu, Jason F. Shogren, Abebayehu Tegene

Wallace Huffman

Public debate continues over whether the United States should regulate genetically modified (GM) foods by imposing a mandatory labeling policy. This paper develops a model that shows that a voluntary GM- labeling policy results in higher welfare than a regulated mandatory GMlabeling policy, if consumers can accurately read the signals in each market. We then develop an experiment that shows consumers behave as if they can accurately identify signals for GM foods. Our model and results support the perspective that the United States has been prudent in fending off calls for regulations demanding a mandatory GM- labeling policy.


Effects And Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food, Matthew Rousu, Wallace Huffman, Jason F. Shogren, Abebayehu Tegene 2016 Susquehanna University

Effects And Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food, Matthew Rousu, Wallace Huffman, Jason F. Shogren, Abebayehu Tegene

Wallace Huffman

Food products containing genetically modified (GM) ingredients have entered the market over the past decade. The biotech industry and environmental groups have disseminating conflicting private information about GM foods. This paper develops a unique methodology for valuing independent third-party information in such a setting and applies this method to consumers’ willingness to pay for food products that might be GM. Data are collected from real consumers in an auction market setting with randomized information and labeling treatments. The average value of third-party information per lab participant is small, but the public good value across U.S. consumers is shown to ...


Estimating The Public Value Of Conflicting Information: The Case Of Genetically Modified Foods, Matthew C. Rousu, Wallace E. Huffman, Jason F. Shogren, Abebayehu Tegene 2016 RTI International

Estimating The Public Value Of Conflicting Information: The Case Of Genetically Modified Foods, Matthew C. Rousu, Wallace E. Huffman, Jason F. Shogren, Abebayehu Tegene

Wallace Huffman

Environmental groups have become the chief antagonists toward agricultural biotechnology innovations. They demonstrate and disseminate private information with the objective of changing the behavior of consumers and producers. We use experimental auctions with adult U.S. consumers and show that this information reduces significantly the demand for genetically modified (GM)-food products and that it has significant public good value—an average of 3 cents per product purchased, or roughly $2 billion annually. We also show that the dissemination of independent third-party information about agricultural biotechnology dissipates most of the public good value of negative GM-product information.


Are U.S. Consumers Tolerant Of Gm Foods?, Matthew Rousu, Wallace E. Huffman, Jason F. Shogren, Abebayehu Tegene 2016 RTI International

Are U.S. Consumers Tolerant Of Gm Foods?, Matthew Rousu, Wallace E. Huffman, Jason F. Shogren, Abebayehu Tegene

Wallace Huffman

Genetically modified (GM) foods have caused many controversies. One important controversy relates to tolerance—the impurity rate that is tolerated before a commodity must be labeled as genetically modified. Currently, the United States does not have a specific tolerance or threshold level for GM foods. This paper uses experimental auctions to determine consumers’ acceptance of non-GM foods with zero, 1 percent, and 5 percent tolerance for genetically modified material. Our results indicate that consumers would pay less for food that tolerates GM material, but the discount is not significantly different for foods with 1-percent and 5-percent GM content.


Optimal Pricing Strategies For A Cluster Of Goods: Own- And Cross-Price Effects With Correlated Tastes, Francisco Rosas, Santiago Acerenza, Peter Orazem 2016 Universidad ORT Uruguay and Centro de Investigaciones Económicas (CINVE)

Optimal Pricing Strategies For A Cluster Of Goods: Own- And Cross-Price Effects With Correlated Tastes, Francisco Rosas, Santiago Acerenza, Peter Orazem

Economics Working Papers

gent valuation methods are used to identify observed and unobserved preferences of goods and services. We apply these methods to compute willingness to pay (WTP) for a product conditional on having purchased another offered product. We provide a derivation for own-price and compensated cross-price elasticities whose results suggest a pricing strategy considering all offered goods simultaneously. Therefore, we solve the social planner’s problem maximizing a weighted function of producer’s revenues and consumer’s utility for the set of optimal prices. We show an application to collegiate sports, but these methods can be extended in a straightforward fashion to ...


Structure, Behavior, And Market Power In An Evolutionary Labor Market With Adaptive Search, Leigh Tesfatsion 2016 Iowa State University

Structure, Behavior, And Market Power In An Evolutionary Labor Market With Adaptive Search, Leigh Tesfatsion

Leigh Tesfatsion

This study uses an agent-based computational labor market framework to undertake a systematic experimental investigation of the relationship between job capacity, job concentration, and market power. Job capacity is measured by the ratio of total potential job openings to total potential work offers, and job concentration is measured by the ratio of work suppliers to employers. For each setting of the capacity and concentration treatment factors, work suppliers and employers repeatedly seek V- preferred worksite partners based on continually updated expected utility, engage in efficiency-wage worksite interactions mmodeledas prisoner's dilemma games, and evolve their worksite behaviors over time. The ...


Walras' Law, Pareto Efficiency, And Intermediation In Overlapping Generations Economies, Mark Pingle, Leigh Tesfatsion 2016 Iowa State University

Walras' Law, Pareto Efficiency, And Intermediation In Overlapping Generations Economies, Mark Pingle, Leigh Tesfatsion

Leigh Tesfatsion

Aiyagari (1992) demonstrates a connection between the failure of Walras' Law and nonoptimal equilibria for a version of the pure-exchange overlapping generations (OG) econ omy first studied by Samuelson (1958). The significant implication ofWalras' Law in finite economies, given all prices are positive and all consumers are locally nonsatiated, is that an excess supply (in value terms) cannot exist for some subset of goods without an excess demand (in value terms) existing forsome othersubset ofgoods. Aiyagari defines the failure of Walras' Law as a situation in which this implication of Walras' Law does not hold. His basic and interesting result ...


Market Power And Efficiency In A Computational Electricity Market With Discriminatory Double-Auction Pricing, James Nicolaisen, Valentin Petrov, Leigh Tesfatsion 2016 Iowa State University

Market Power And Efficiency In A Computational Electricity Market With Discriminatory Double-Auction Pricing, James Nicolaisen, Valentin Petrov, Leigh Tesfatsion

Leigh Tesfatsion

This study reports experimental market power and efficiency outcomes for a computational wholesale electricity market operating In the short run under systematically varied concentration and capacity conditions. The pricing of electricity is determined by means of a clearinghouse double auction with discriminator}- midpoint pricing. Buyers and sellers use a modified Roth-Erev individual reinforcement learning algorithm to determine their price and quantity offers in each auction round. It is shown that high market efficiency is generally attained, and that market microstructure is strongly predictive for the relative market power of buyers and sellers independently of the values set for the reinforcement ...


Human Capital Investment And The Locally Rational Child, Peter F. Orazem, Leigh Tesfatsion 2016 Iowa State University

Human Capital Investment And The Locally Rational Child, Peter F. Orazem, Leigh Tesfatsion

Leigh Tesfatsion

This study analyzes an overlapping generations economy with multiple family dynasties in which the abihty levels of children are random and unobservable. Each parent allocates his income between consumption and investment in the education of his child. Each child, in turn, decides how much effort toexert in school on the basis of his perceived marginal returns to schooling, a perception shaped in part by the child's perception ofthe marginal returns to "schooling attained by his parent. The income tax policies available to government range from hbertarian (no redistribution) to perfectly egalitarian (equalization of after-tax family incomes in each period ...


Non-Employment Benefits And The Evolution Of Worker-Employer Cooperation: Experiments With Real And Computational Agents, Mark Pingle, Leigh Tesfatsion 2016 University of Nevada - Reno

Non-Employment Benefits And The Evolution Of Worker-Employer Cooperation: Experiments With Real And Computational Agents, Mark Pingle, Leigh Tesfatsion

Leigh Tesfatsion

Experiments with real and computational agents are used to examine the impact of changing the level of a non-employment payoff on the evolution of cooperation between workers and employers participating in a sequential employment game with incomplete contracts. Workers either direct work offers to preferred employers or choose unemployment. and receive the non-employment payoff. Subject to capacity limitations, employers either accept work offers from preferred workers or remain-vacant' and receive the non-employment payoff. Matched workers and. employers participate in an employment relationship modeled as a prisoner's dilemma game. • In both types of experiments, increases in the non-employment payoff result ...


Intermediation In Overlapping Generations Economies, Mark Pingle, Leigh Tesfatsion 2016 Iowa State University

Intermediation In Overlapping Generations Economies, Mark Pingle, Leigh Tesfatsion

Leigh Tesfatsion

Do active earnings-driven intermediaries have a significant role to play in dynamic economies, even in the absence of transactions costs and asymmetrical information? This paper shows that the answer is "yes" for the overlapping generations (OG) economy...


Gale-Shapley Matching In An Evolutionary Trade Network Game, Leigh Tesfatsion 2016 Iowa State University

Gale-Shapley Matching In An Evolutionary Trade Network Game, Leigh Tesfatsion

Leigh Tesfatsion

This study investigates the performance of Gale-Shapley matching in an evolutionary market context. Computational experimental findings are reported for an evolutionary match-and-play trade network game in which resource-constrained traders repeatedly choose and refuse trade partners in accordance with GaleShapley matching, participate in risky trades modeled two-person prisoner's dilemma games, and evolve their trade behavior over time. Particular attention is focused on correlations between ex ante market structure and the formation of trade networks, and between trade network formation and the types of trade behavior and social welfare outcomes that these trade networks support.


Hysteresis In An Evolutionary Labor Market With Adaptive Search, Leigh Tesfatsion 2016 Iowa State University

Hysteresis In An Evolutionary Labor Market With Adaptive Search, Leigh Tesfatsion

Leigh Tesfatsion

This study undertakes a systematic experimental investigation of hysteresis (path dependency) in an agent-based computational labor market framework. It is shown that capacity asymmetries between work suppliers and employers can result in two distinct hysteresis effects, network and-behavioral, when work suppliers and employers interact strategically and evolve their work site behaviors over time. These hysteresis effects result in persistent heterogeneity in earnings and employment histories across agents who have no observable structural differences. At a more global level, these hysteresis effects are shown to result in a one-to-many mapping between treatment factors and experimental outcomes. These hysteresis effects may help ...


Active Intermediation In A Monetary Overlapping Generations Economy, Mark Pingle, Leigh Tesfatsion 2016 Iowa State University

Active Intermediation In A Monetary Overlapping Generations Economy, Mark Pingle, Leigh Tesfatsion

Leigh Tesfatsion

In Pingle and Tesfatsion (1991) we question whether the conventional definition of a competitive equilibrium, as applied to an overlapping generations economy, is truly satisfactory. The conventional definition was developed for a standard Walrasian economy with a finite number of consumers and goods whereas the overlapping generations economy necessarily contains an infinite number of consumers and goods. As noted by Shell (1971), the presence of this double infinity in overlapping generations economies introduces a new trading opportunity: namely, the possibility of incurring and rolling over a debt forever as time proceeds into the infinite future. The problem with applying the ...


Income Distribution, Export Instability, And Savings Behavior, David Lim 2016 Technological and Higher Education Institute of Hong Kong, Vocational Training Council

Income Distribution, Export Instability, And Savings Behavior, David Lim

Prof. David Lim

This paper examines the effects of income distribution and export instability on the savings ratios of a group of 12 developed and 52 less developed countries (DCs and LDCs) for 1968-73. The effect of income distribution on savings has been studied before but not on as comprehensive a group of countries as presented here. The effect of export instability on savings has not been examined before in the literature on the determinants of savings behavior. It has, however, been discussed in the literature on the relationship between export instability and economic growth and part of the purpose of this paper ...


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