After the participants filled out the financial records inventory sheet, they were requested
to decide on an amount, e.g., a bid, for which they were willing to sell all the documents listed on
their inventory. Because the bid consists of the price at which participants were willing to sell
several different types of financial information, the participants were asked to indicate, in
percentage terms, the amount that reflected their value for the balance sheet, statement of cash
flows, income statement, statement of owner’s equity, checkbook register, and tax records.
Several key points were emphasized to the participants. Participants were informed that
bids would be collected at several locations over the time period of several days. The lowest
bidder across all locations would be contacted later to be informed of their winning. It was also
stressed that the auction was not hypothetical; the winner would receive real money for his/her
financial records. The instructions emphasized that the winner was expected to give all originals
and copies of the records listed on their individual financial records inventory sheet. It was made
clear that the farmer with the lowest bid would receive in cash the overall second lowest bid
price, but he/she would forfeit his records. A tax audit was the only exception to the winner of
the auction regaining the right to view his/her records. As in the candy bar auction, it was
explained, in detail, why the best strategy was to submit a bid exactly equal to the amount that
would make the person indifferent between money and their records. It was explained that no
bid was too small or too high. The participants were also told that if there was no amount of
money they were willing to accept for their financial records, they could select that option on the
bid sheet. An opt-out option was offered to discourage participants from writing down an
artificially high bid price out of “protest” and to discourage participants from leaving the bid
sheet blank.3
3 Auction instructions, the bid sheet, and the survey are available from the authors on request.
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