Consumers' Willingness to Pay for the Color of Salmon: A Choice Experiment with Real Economic Incentives

Abstract

We designed an experimental market with posted prices to investigate consumers' willingness to pay for the color of salmon. Salmon fillets varying in color and price were displayed in 20 choice scenarios. In each scenario, the participants chose which of two salmon fillets they wanted to buy. To induce real economic incentives, each participant drew one unique binding scenario; the participants then had to buy the salmon fillet they had chosen in their binding scenario.Key words: choice experiment, color, mixed logit, salmon, willingness to pay.During the last decade, economists have used experimental markets to investigate consumer preferences and willingness to pay (WTP) for food quality attributes. The most popular method has been the second-price sealed-bid (Vickrey) auction where the participants submit sealed bids for the product and the price is determined by the secondhighest bid (Vickery, Shogren et al., Alfnes and Rickertsen). The Vickrey auction is an incentive compatible method for eliciting WTP; however, it is an unfamiliar market mechanism for most consumers. Consumers are more familiar with markets where the seller posts the prices and they, as consumers, have to choose which products to buy. 3Lusk and Schroeder designed an experimental market with posted prices to investigate consumers' WTP for food quality attributes. They had five types of beef, and ask the participants to choose which of the five types they would prefer to buy in 17 pricing scenarios. To induce real economic incentives, one of the price scenarios was randomly drawn as binding. The participants had to buy the type of beef they had chosen in the binding scenario and pay the respective price posted in that scenario. The choice task in such an experiment is relatively close to the choice tasks consumers face in grocery stores every day. Furthermore, it is in the participants' own interest to choose the alternative they prefer in each scenario, and their incentives to reveal true preferences is relatively transparent. We will refer to such non-hypothetical choice experiment with posted prices as real choice (RC) experiments.We have conducted a RC experiment to investigate consumers' WTP for salmon with various degrees of flesh redness, and to investigate whether information on the origin of the color influence consumers' WTP. Salmon are recognized for their pink-red flesh color, which distinguishes them from other species. Consumers use intrinsic cues such as color to infer the quality of food products. In surveys as well as focus groups, consumers have stated that they see the color of salmon as an indicator of flavor and freshness, and it has been shown that redness contributes significantly to the overall enjoyment of cooked salmon (Anderson, Sylvia et al.).Consumers' WTP for the color of farmed salmon is interesting for at least two reasons. While wild salmon get their characteristic red color from the crustances they eat in the sea. Farmed salmon get the color from synthetically produced feed additives. 4However, the f...

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