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The willingness to pay–willingness to accept gap: A failed replication of Plott and Zeiler

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  • Fehr, Dietmar
  • Hakimov, Rustamdjan
  • Kübler, Dorothea

Abstract

The well-known willingness to pay–willingness to accept (WTP–WTA) gap refers to the observation that individuals attach a higher value to objects they own (WTA) than to objects they do not own (WTP). We report on experiments to re-investigate the possibility that the WTP–WTA gap arises from subject misconceptions due to experimental procedures as suggested by Plott and Zeiler (2005). The contribution of this paper is two-fold: first, we attempt to replicate the findings by Plott and Zeiler that the WTP–WTA gap disappears when using procedures that are aimed at reducing misconceptions, such as extensive training and practice rounds for the BDM mechanism. However, we fail to do so as the WTP–WTA gap persists in the main task where subjects state their WTA or WTP for a mug. Second, we use the paid practice rounds to identify subjects without apparent misconceptions and find that also for those subjects who never make dominated choices in the lottery tasks, the WTP–WTA gap in the mug task exists. Thus, we find no evidence of the idea that subject misconceptions are the main source of the WTP–WTA gap.

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  • Fehr, Dietmar & Hakimov, Rustamdjan & Kübler, Dorothea, 2015. "The willingness to pay–willingness to accept gap: A failed replication of Plott and Zeiler," European Economic Review, Elsevier, vol. 78(C), pages 120-128.
  • Handle: RePEc:eee:eecrev:v:78:y:2015:i:c:p:120-128
    DOI: 10.1016/j.euroecorev.2015.05.006
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    Cited by:

    1. Drouvelis, Michalis & Sonnemans, Joep, 2017. "The endowment effect in games," European Economic Review, Elsevier, vol. 94(C), pages 240-262.
    2. Jonathan Chapman & Mark Dean & Pietro Ortoleva & Erik Snowberg & Colin Camerer, 2017. "Willingness to Pay and Willingness to Accept are Probably Less Correlated Than You Think," NBER Working Papers 23954, National Bureau of Economic Research, Inc.
    3. Currarini, Sergio & Mengel, Friederike, 2016. "Identity, homophily and in-group bias," European Economic Review, Elsevier, vol. 90(C), pages 40-55.
    4. Bull, Charles & Courty, Pascal & Doyon, Maurice & Rondeau, Daniel, 2019. "Failure of the Becker–DeGroot–Marschak mechanism in inexperienced subjects: New tests of the game form misconception hypothesis," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 235-253.
    5. Christian A. Vossler & Stéphane Bergeron & Maurice Doyon & Daniel Rondeau, 2020. "Revisiting the Gap Between the Willingness-to-Pay and Willingness-to-Accept for Public Goods," CIRANO Working Papers 2020s-48, CIRANO.
    6. Liu, Runqiu & Jiang, Jian & Yu, Chao & Rodenbiker, Jesse & Jiang, Yongmu, 2021. "The endowment effect accompanying villagers' withdrawal from rural homesteads: Field evidence from Chengdu, China," Land Use Policy, Elsevier, vol. 101(C).
    7. Björn Bartling & Florian Engl & Roberto A. Weber, 2015. "Game form misconceptions are not necessary for a willingness-to-pay vs. willingness-to-accept gap," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 72-85, July.
    8. Koń, Beata & Jakubczyk, Michał, 2019. "Is the literature on the WTP-WTA disparity biased?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 82(C).
    9. Brebner, Sarah & Sonnemans, Joep, 2018. "Does the elicitation method impact the WTA/WTP disparity?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 73(C), pages 40-45.
    10. Domenico Colucci & Chiara Franco & Vincenzo Valori, 2021. "Endowment effects at different time scenarios: the role of ownership and possession," Discussion Papers 2021/279, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

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    More about this item

    Keywords

    WTP–WTA gap; Endowment effect; BDM mechanism; Misconceptions; Replication;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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