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The Willingness to Pay—Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations: Comment

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Author Info

  • Andrea Isoni
  • Graham Loomes
  • Robert Sugden

Abstract

Plott and Zeiler (2005) report that the willingness-to-pay/willingness-to-accept disparity is absent for mugs in a particular experimental setting, designed to neutralize misconceptions about the procedures used to elicit valuations. This result has received sustained attention in the literature. However, other data from that same study, not published in that paper, exhibit a significant and persistent disparity when the same experimental procedures are applied to lotteries. We report new data confirming both results, thereby suggesting that the presence or absence of a disparity may be a more complex issue than some may have supposed. (JEL C91, D12, D81, D83)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.2.991
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 2 (April)
Pages: 991-1011

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:2:p:991-1011

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Cited by:
  1. Lunn, Pete & Lunn, Mary, 2014. "A Computational Theory of Willingness to Exchange," Papers WP477, Economic and Social Research Institute (ESRI).
  2. Sousa, Yannick Ferreira De & Munro, Alistair, 2012. "Truck, barter and exchange versus the endowment effect: Virtual field experiments in an online game environment," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 482-493.
  3. Susan Chilton & Michael Jones-Lee & Rebecca McDonald & Hugh Metcalf, 2012. "Does the WTA/WTP ratio diminish as the severity of a health complaint is reduced? Testing for smoothness of the underlying utility of wealth function," Journal of Risk and Uncertainty, Springer, vol. 45(1), pages 1-24, August.
  4. M. Vittoria Levati & Jianying Qiu & Prashanth Mahagaonkar, 2011. "Testing the Modigliani-Miller theorem directly in the lab," Jena Economic Research Papers 2011-021, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Kogler, Christoph & Kühberger, Anton & Gilhofer, Rainer, 2013. "Real and hypothetical endowment effects when exchanging lottery tickets: Is regret a better explanation than loss aversion?," Journal of Economic Psychology, Elsevier, vol. 37(C), pages 42-53.

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