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The effect of power outages and cheap talk on willingness to pay to reduce outages

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  • Carlsson, Fredrik
  • Martinsson, Peter
  • Akay, Alpaslan

Abstract

Using an open-ended contingent valuation survey, we analyze how (i) experience of a power outage due to one of the worst storms ever to hit Sweden and (ii) a cheap talk script affect respondents' WTP to avoid power outages. Experience significantly increases and a cheap talk script significantly decreases the proportion of respondents with zero WTP, and as a result stated WTP is lower with experience and the cheap talk script. The paper concludes with a discussion on the use of valuation studies shortly after the occurrence of an undesirable event.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 33 (2011)
Issue (Month): 5 (September)
Pages: 790-798

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Handle: RePEc:eee:eneeco:v:33:y:2011:i:5:p:790-798

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Web page: http://www.elsevier.com/locate/eneco

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Keywords: Contingent valuation Cheap talk Experience Power outages;

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Cited by:
  1. Ladenburg, Jacob & Lutzeyer, Sanja, 2012. "The economics of visual disamenity reductions of offshore wind farms—Review and suggestions from an emerging field," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(9), pages 6793-6802.
  2. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stéphane Luchini, 2011. "A Test of Cheap Talk in Different Hypothetical Contexts: The Case of Air Pollution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 50(1), pages 111-130, September.
  3. Fredrik Carlsson, 2010. "Design of Stated Preference Surveys: Is There More to Learn from Behavioral Economics?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 46(2), pages 167-177, June.
  4. Li, Xiaoshu & Boyle, Kevin J. & Pullis, Genevieve, 2012. "Does On-site Experience Affect Responses to Stated Preference Questions?," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington, Agricultural and Applied Economics Association 124991, Agricultural and Applied Economics Association.

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