Using laboratory experimental auctions in marketing research: A case study of new packaging for fresh beef

This paper illustrates the use of laboratory experimental auctions in a pretest market research program for new products. The authors review the experimental auctions literature, discuss the range of auction mechanisms available and present the advantages and disadvantages of using a particular mechanism for a laboratory pretest market. They then present a step-by-step example of how a theoretically incentive compatible auction mechanism (fifth-price, sealed-bid) was used in a laboratory pretest market for vacuum-packaged beef. Based on the illustration, the authors discuss the potential for using laboratory experimental auctions in pretest market research. They present the limitations that may be encountered in such applications and outline research aimed at improving the behavioral properties of the technique.