The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Environmental Goods
AbstractThis paper develop and estimates a model of demand estimation for environmental public goods which allows for consumers to learn about their preferences through consumption experiences. We develop a theoretical model of Bayesian updating, perform comparative statics over the model, and show how the theoretical model can be consistently incorporated into a reduced form econometric model. We then estimate the model using data collected for two environmental goods. We find that the predictions of the theoretical exercise that additional experience makes consumers more certain over their preferences in both mean and variance are supported in each cas e.
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Bibliographic InfoPaper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2013-11.
Date of creation: Oct 2013
Date of revision:
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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
Phone: +44 (0)1786 467473
Fax: +44 (0)1786 467469
Web page: http://www.econ.stir.ac.uk/
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scale variance; scale; generalized multinomial logit; Bayesian updating; stated preferences; preference learning; discrete choice experiment;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-16 (All new papers)
- NEP-DCM-2013-11-16 (Discrete Choice Models)
- NEP-ENV-2013-11-16 (Environmental Economics)
- NEP-UPT-2013-11-16 (Utility Models & Prospect Theory)
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- repec:stl:stledp:2014-06 is not listed on IDEAS
- Czajkowski, Mikolaj & Hanley, Nicholas & LaRiviere, Jacob & Simpson, Katherine, 2014. "What is the Causal Effect of Information and Learning about a Public Good on Willingness to Pay?," Stirling Economics Discussion Papers 2014-05, University of Stirling, Division of Economics.
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