WTP/WTA Disparity: Have We Been Observing Dynamic Values but Interpreting Them as Static?, The
AbstractThis study advances, and experimentally tests, a new explanation for the disparity between willingness to pay (WTP) and willingness to accept (WTA)â€”a dynamic neoclassical theory based on the presence of commitment costs. While to date neoclassical models have not explained the observed data patterns well, we find that the commitment cost theory is able to explain adequately the causes and severity of the WTP/WTA value disparity. In particular, using data gathered from an actual marketplace, even the most stringent of our theoretical conjecturesâ€”cases where WTP values are predicted to exceed WTA valuesâ€”oftentimes are met.
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Bibliographic InfoPaper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 03-wp333.
Date of creation: May 2003
Date of revision:
field experiment; neoclassical theory; willingness to accept; willingness to pay; WTP/WTA disparity.;
Find related papers by JEL classification:
- Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
- Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
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