Information effects on consumer willingness to pay for electricity and water service attributes
AbstractConsumers constantly make decisions about the goods and services they purchase, and in most cases they do this with incomplete information. Many products that are available in stores, in catalogues, or over the internet are not accompanied by a full list of attributes or technical specifications. Such a lack of information is most apparent in non-market goods, such as with regard to utility service attributes. This paper examines information effects on consumers’ willingness to pay (WTP) for a number of electricity and water attributes, using two contingent valuation surveys administered in the United Kingdom. The attributes considered include WTP for a carbon cleaner electricity fuel mixture, and increasing security of supply. The results indicate that the quantity and complexity of information can potentially lead to individuals ignoring the information presented. The relevance of the attribute to the respondent is found to be a significant motivator in the processing of the information presented. The survey data also reveal a number of socio-economic, attitudinal and behavioural factors that affect WTP for the attributes considered.
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Bibliographic InfoPaper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 160.
Length: 37 pages
Date of creation: Oct 2013
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Publication status: Published in Working papers 160, European Bank for Reconstruction and Development
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Contingent Valuation Method; Blackouts; Information Effect; Willingness to Pay; Zero Inflated Ordered Probit Model;
Find related papers by JEL classification:
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- D10 - Microeconomics - - Household Behavior - - - General
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
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