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Value learning and the willingness to accept–willingness to pay disparity

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  • Kingsley, David C.
  • Brown, Thomas C.

Abstract

The assumption that individual preferences are rational and consistent with standard economic theory is often appropriate, but may be optimistic if consumers are uncertain about either their preferences or how the market operates. Both sources of uncertainty may present themselves in lab experiments exploring the well-known disparity between individuals’ willingness to accept and willingness to pay. This paper explores the role of value uncertainty in the observed disparity, and finds that providing subjects with a value learning opportunity can reduce the value disparity to insignificance.

Suggested Citation

  • Kingsley, David C. & Brown, Thomas C., 2013. "Value learning and the willingness to accept–willingness to pay disparity," Economics Letters, Elsevier, vol. 120(3), pages 473-476.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:473-476
    DOI: 10.1016/j.econlet.2013.05.034
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    References listed on IDEAS

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    Cited by:

    1. Qiu, Jianying, 2015. "Completing incomplete preferences," MPRA Paper 91692, University Library of Munich, Germany, revised 18 Jul 2016.
    2. Kai Xiong & Ning Zhang & Chih-Chun Kung & Fanbin Kong, 2019. "Determinants of Residents’ Willingness to Accept and Their Levels for Ecological Conservation in Ganjiang River Basin, China: An Empirical Analysis of Survey Data for 677 Households," Sustainability, MDPI, vol. 11(21), pages 1-18, November.
    3. Christina McGranaghan & Steven G. Otto, 2022. "Choice uncertainty and the endowment effect," Journal of Risk and Uncertainty, Springer, vol. 65(1), pages 83-104, August.
    4. Fooks, Jacob R. & Messer, Kent D. & Duke, Joshua M. & Johnson, Janet B. & Parsons, George R., 2017. "Continuous attribute values in a simulation environment: Offshore energy production and Mid-Atlantic beach visitation," Energy Policy, Elsevier, vol. 110(C), pages 288-302.
    5. Qiu, Jianying, 2015. "Completing incomplete preferences," MPRA Paper 72933, University Library of Munich, Germany, revised 18 Jul 2016.

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    More about this item

    Keywords

    Discovered preference hypothesis; Value uncertainty; Value learning; Willingness to accept–willingness to pay disparity; Paired comparison experiments;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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