Real Options and the WTP/WTA Disparity
AbstractPresents a real options model of an agent's decision to purchase or sell a good under conditions of uncertainty, irreversibility, and learning over time. The agent's willingness to pay (WTP) and willingness to accept (WTA) contain both the intrinsic value of the good and an option value associated with delaying the decision until more information is available. The model explicitly demonstrates the effect that timing of an action can have on welfare measurement.
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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 99-wp206.
Date of creation: Nov 1998
Date of revision:
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University of California at San Diego, Economics Working Paper Series
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