The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Goods
AbstractThis paper develops a model of demand estimation in which consumers learn about their true 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 quasi-public goods. We find that the predictions of the theoretical exercise that additional experience with a good will make consumers more certain over their preferences in both mean and variance are supported in each case.
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Bibliographic InfoPaper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number 2012-15.
Length: 36 pages
Date of creation: 2012
Date of revision:
The support of the Polish Ministry of Science and Higher Education and the Foundation for Polish Science is gratefully acknowledged.;
Other versions of this item:
- Czajkowski, Mikolaj & Hanley, Nicholas & LaRiviere, Jacob, 2012. "The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Goods," Stirling Economics Discussion Papers 2012-17, University of Stirling, Division of Economics.
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
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