Advanced Search
MyIDEAS: Login to save this article or follow this journal

Uncertainty, Risk Aversion, and WTA vs. WTP

Contents:

Author Info

  • Erica Mina Okada

    ()
    (Shidler College of Business, University of Hawaii at Manoa, Honolulu, Hawaii 96822)

Registered author(s):

    Abstract

    We examine a previously unstudied category of exchange items in which the true value is unknown to both the buyer and seller at the time of exchange but becomes known to both at a future time after the exchange. Real-world examples of such exchange items as in our study include forward contracts and fixed-fee turnkey contracts. We demonstrate that the discrepancy between the seller's willingness to accept (WTA) and buyer's willingness to pay (WTP) increases with (1) the level of uncertainty about the exchange item's value and (2) the exchange parties' level of risk aversion. In a series of studies, we manipulate and measure the level of uncertainty of the exchange item, measure the level of risk aversion of the exchange parties, and study the respective effects on decreasing the WTP while increasing the WTA.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://dx.doi.org/10.1287/mksc.1080.0480
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 29 (2010)
    Issue (Month): 1 (01-02)
    Pages: 75-84

    as in new window
    Handle: RePEc:inm:ormksc:v:29:y:2010:i:1:p:75-84

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Email:
    Web page: http://www.informs.org/
    More information through EDIRC

    Related research

    Keywords: exchange; valuation; willingness to pay; willingness to accept; buyer; seller; uncertainty; risk aversion;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Khantachavana, Sivalai V. & Turvey, Calum G. & Kong, Rong & Xia, Xianli, 2013. "On the transaction values of land use rights in rural China," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 863-878.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:29:y:2010:i:1:p:75-84. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.