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Risk-learning process in forming willingness-to-pay for egg safety

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  • Atsushi Maruyama

    (Department of Agricultural Economics, Faculty of Horticulture, Chiba University, Chiba 271-8510, Japan. E-mail: a.maruyama@faculty.chiba-u.jp)

  • Masao Kikuchi

    (Department of Agricultural Economics, Faculty of Horticulture, Chiba University, Chiba 271-8510, Japan. E-mail: m.kikuchi@faculty.chiba-u.jp)

Abstract

Using data obtained from a mail survey on consumers' willingness-to-pay (WTP) and risk beliefs for reducing the risk of salmonella contamination of eggs, we have examined the risk-learning process through which individuals form their WTP. The results of estimation of the WTP function support the hypothesis that respondents follow an adaptive learning process, in which they establish their posterior risk belief in a rational manner by adapting their prior risk belief as they are supplied with new risk information. We find that the weight of the prior risk belief is slightly smaller than that of new risk information in forming the posterior risk belief for three out of four estimation models. Knowledge of how consumers form their risk beliefs and who evaluates egg safety enables us to clearly specify targets for effective campaigns to enhance public awareness at a household level about health and food safety issues. [EconLit citations: D120, Q260.] © 2004 Wiley Periodicals, Inc. Agribusiness 20: 167-179, 2004.

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File URL: http://hdl.handle.net/10.1002/agr.20005
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

Volume (Year): 20 (2004)
Issue (Month): 2 ()
Pages: 167-179

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Handle: RePEc:wly:agribz:v:20:y:2004:i:2:p:167-179

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Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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  1. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  2. Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, vol. 80(3), pages 353-74, June.
  3. Dickie, M. & Gerking, S.D., 1996. "Formation of risk beliefs, joint production and willingness to pay to avoid skin cancer," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4742868, Tilburg University.
  4. John C. Whitehead, 1995. "Willingness to Pay for Quality Improvements: Comparative Statics and Interpretation of Contingent Valuation Results," Land Economics, University of Wisconsin Press, vol. 71(2), pages 207-215.
  5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  6. Harrington, Winston & Portney, Paul R., 1987. "Valuing the benefits of health and safety regulation," Journal of Urban Economics, Elsevier, vol. 22(1), pages 101-112, July.
  7. Viscusi, W Kip, 1991. "Age Variations in Risk Perceptions and Smoking Decisions," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 577-88, November.
  8. Viscusi, W Kip & O'Connor, Charles J, 1984. "Adaptive Responses to Chemical Labeling: Are Workers Bayesian Decision Makers?," American Economic Review, American Economic Association, vol. 74(5), pages 942-56, December.
  9. Dickie, M. & Gerking, S.D., 1991. "Valuing reduced morbidity: A household production approach," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4742834, Tilburg University.
  10. W. Kip Viscusi & William N. Evans, 1998. "Estimation Of Revealed Probabilities And Utility Functions For Product Safety Decisions," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 28-33, February.
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Cited by:
  1. Goddard, Ellen W. & Boxall, Peter C. & Emunu, John Paul & Boyd, Curtis & Asselin, Andre & Neall, Amanda, 2007. "Consumer Attitudes, Willingness to Pay and Revealed Preferences for Different Egg Production Attributes: Analysis of Canadian Egg Consumers," Project Report Series 52087, University of Alberta, Department of Resource Economics and Environmental Sociology.

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