Experimental auctions with exogenous and endogenous information treatment: Willingness to pay for improved parboiled rice in Benin

Abstract

The impact of information as an extrinsic quality cue on consumers’ valuation of intrinsic food quality attributes can be captured by incorporating ‘information treat ments’ in experimental auctions. We combine ‘exogenous’ information treatments (a video broadcast and a radio transcript) on the benefits of a locally produced improved rice processing technology with an ‘endogenous’ infor mation treatment which elicits word-of-mouth exchange among consumers. We assess the effects of these informa tion treatments on consumers’ choice and valuation of parboiled rice with upgraded quality in two urban markets in Benin. We find that exogenous information increases market share of the locally produced improved product by 14% at the expense of the competing, imported prod uct, an effect which is further amplified by 11% through endogenous information. Endogenous information has a dampening effect on price premiums though; while visual and auditory information added 6–14% value to local rice, word-of-mouth reduced the value by 2%