This paper analyzes the effect that potential future availability of information has on willingness to pay in a contingent market characterized by uncertainty and irreversibility. In particular, I test whether the effect is consistent with the predictions of Zhao and Kling’s (forthcoming) theory of commitment cost. The analysis is performed using the results of a contingent valuation study designed to estimate the degree to which local residents value improved water quality in Clear Lake, a spring-fed, glacial lake located in north-central Iowa. The results show that willingness to pay is highly sensitive to the potential for future learning. Offering survey respondents the opportunity to delay their purchasing decision until more information is available led to a significant decrease in willingness to pay. This suggests that contingent valuation practitioners must take care to accurately represent the potential for future learning or else risk biased valuation estimates.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number
2023.
Length: Date of creation: 06 Dec 2001 Date of revision: Handle: RePEc:isu:genres:2023
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070 Phone: +1 515.294.6741 Fax: +1 515.294.0221 Email: Web page: http://www.econ.iastate.edu More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Stephanie Bridges).
Related research
Keywords:
Other versions of this item:
Find related papers by JEL classification: A1 - General Economics and Teaching - - General Economics
This paper has been announced in the following NEP Reports:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: