Revealing consumers' willingness-to-pay: A comparison of the BDM mechanism and the Vickrey auction

We compare the capability of the Becker-DeGroot-Marschak (BDM) mechanism and the Vickrey auction to reveal willingness-to-pay information for a sample of French consumers. We measure the bias and dispersion of bids relative to valuations. We find that the Vickrey auction, for the particular training procedure we employ, is more effective as a willingness-to-pay elicitation device than the BDM process. We conjecture that differences in the shape of the payoff function account for some of the differences. (C) 2003 Elsevier B.V. All rights reserved.