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Willingness-To-Pay vs. Willingness-To-Accept: Legal and Economic Implications

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  • Hoffman, Elizabeth
  • Spitzer, Matthew L.

Abstract

Do people value commodities more when they own the commodities than when they do not? Although economic models generally presume that economic agents evaluate commodities independently of whether the agents own those commodities--the "basic independence" assumption researchers in economics and law are starting to doubt whether this assumption is true. Doubts about the soundness of the basic independence assumption challenge accepted economic doctrines. Most theoretical and applied models in economics use the basic independence assumption both to predict and to assess the operation of markets. In the relatively new discipline that combines law and economics, the basic independence assumption produces the Coase Theorem, which is the starting point for much economic analysis of legal rules.

Suggested Citation

  • Hoffman, Elizabeth & Spitzer, Matthew L., 1993. "Willingness-To-Pay vs. Willingness-To-Accept: Legal and Economic Implications," ISU General Staff Papers 199301010800001571, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:199301010800001571
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    Cited by:

    1. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
    2. Fischel, William A., 1995. "The offer/ask disparity and just compensation for takings: A constitutional choice perspective," International Review of Law and Economics, Elsevier, vol. 15(2), pages 187-203, June.
    3. John A. List, 2006. "Using Hicksian Surplus Measures to Examine Consistency of Individual Preferences: Evidence from a Field Experiment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 115-134, March.
    4. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    5. Julia M. Puaschunder, 2023. "The Endowment Effect and Self-Determination as Drivers of Co-Creation Online," RAIS Conference Proceedings 2022-2023 0318, Research Association for Interdisciplinary Studies.
    6. Steegmans, Joep & Hassink, Wolter, 2017. "Financial position and house price determination: An empirical study of income and wealth effects," Journal of Housing Economics, Elsevier, vol. 36(C), pages 8-24.
    7. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, March.
    8. Sanjit Dhami & Emma Manifold & Ali al‐Nowaihi, 2021. "Identity and Redistribution: Theory and Evidence," Economica, London School of Economics and Political Science, vol. 88(350), pages 499-531, April.
    9. Zervogianni, Eleni, 2004. "Remedies for damage to property: money damages or restitution in natura?," International Review of Law and Economics, Elsevier, vol. 24(4), pages 525-541, December.
    10. Sanjit Dhami & Emma Manifold & Ali al-Nowaihi, 2018. "Prosociality, Political Identity, and Redistribution of Earned Income: Theory and Evidence," CESifo Working Paper Series 7256, CESifo.
    11. Nape, Steven & Frykblom, Peter & Harrison, Glenn W. & Lesley, James C., 2003. "Hypothetical bias and willingness to accept," Economics Letters, Elsevier, vol. 78(3), pages 423-430, March.
    12. Roth, Gerrit, 2006. "Predicting the Gap between Willingness to Accept and Willingness to Pay," Munich Dissertations in Economics 4901, University of Munich, Department of Economics.
    13. Nash, Jane Gradwohl & Rosenthal, Robert A., 2014. "An investigation of the endowment effect in the context of a college housing lottery," Journal of Economic Psychology, Elsevier, vol. 42(C), pages 74-82.
    14. Chern, Wen S. & Chang, Chun-Yu, 2009. "Benefit Evaluation of the Country of Origin Labeling in Taiwan: Results from Auction Experiment," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49215, Agricultural and Applied Economics Association.
    15. Chern, Wen S. & Chang, Chun-Yu, 2012. "Benefit evaluation of the country of origin labeling in Taiwan: Results from an auction experiment," Food Policy, Elsevier, vol. 37(5), pages 511-519.
    16. Herbert Hovenkamp, 2011. "Coasean markets," European Journal of Law and Economics, Springer, vol. 31(1), pages 63-90, February.

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