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Willingness-to-Pay and Willingness-to-Accept for Risky and Ambiguous Lotteries

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Author Info
Eisenberger, Roselies
Weber, Martin
Abstract

Former studies have shown that people tend to give buying prices that are lower than selling prices. In our study, we investigate if this willingness-to-accept and willingness-to-pay disparity is affected by ambiguity. Using a Becker, DeGroot, and Marschak procedure, we elicit buying, selling, short-selling, and short-buying prices. The results indicate that subjects clearly distinguish between risky and ambiguous lotteries and the different ways in which lotteries are framed. However, the average WTA/WTP ratios are remarkably close for all lotteries considered, as well as for negative and positive framing. Copyright 1995 by Kluwer Academic Publishers

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Publisher Info
Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 10 (1995)
Issue (Month): 3 (May)
Pages: 223-33
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Handle: RePEc:kap:jrisku:v:10:y:1995:i:3:p:223-33

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  1. Sujoy Chakravarty & Jaideep Roy, 2009. "Recursive expected utility and the separation of attitudes towards risk and ambiguity: an experimental study," Theory and Decision, Springer, vol. 66(3), pages 199-228, March. [Downloadable!] (restricted)
  2. Bernie J. O'Brien & Kirsten Gertsen & Andrew R. Willan & A. Faulkner, 2002. "Is there a kink in consumers' threshold value for cost-effectiveness in health care?," Health Economics, John Wiley & Sons, Ltd., vol. 11(2), pages 175-180. [Downloadable!]
  3. Bernard van den Berg & Han Bleichrodt & Louis Eeckhoudt, 2005. "The economic value of informal care: a study of informal caregivers' and patients' willingness to pay and willingness to accept for informal care," Health Economics, John Wiley & Sons, Ltd., vol. 14(4), pages 363-376. [Downloadable!]
  4. Andreas Glöckner & Janet Kleber & Stephan Tontrup & Stefan Bechtold, 2009. "The Endowment Effect in Groups with and without Strategic Incentives," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2009_35, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  5. W. Douglass Shaw & Rodolfo M. Nayga, Jr. & Andres Silva, 2006. "Health benefits and uncertainty: an experimental analysis of the effects of risk presentation on auction bids for a healthful product," Economics Bulletin, Economics Bulletin, vol. 4(20), pages 1-8. [Downloadable!]
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  6. Mercè Roca & Robin Hogarth & A. Maule, 2006. "Ambiguity seeking as a result of the status quo bias," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 175-194, May. [Downloadable!] (restricted)
  7. Ulrich Schmidt & Stefan Traub, 2009. "An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries," Theory and Decision, Springer, vol. 66(3), pages 229-262, March. [Downloadable!] (restricted)
    Other versions:
  8. Mercè Roca & Robin Hogarth & A. John Maule, 2005. "Ambiguity Seeking as a Result of the Status Quo Bias," Economics Working Papers 882, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2006. [Downloadable!]
  9. Nayga, Rodolfo & Shaw, W. Douglass & Silva, Andres, 2006. "The Effect of Risk Presentation on Product Valuation: An Experimental Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 21429, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  10. William Neilson & Michael McKee & Robert P. Berrens, 2008. "Value and Outcome Uncertainty as Explanations for the WTA vs WTP Disparity: Theory and Experimental Evidence," Working Papers 08-07, Department of Economics, Appalachian State University. [Downloadable!]
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