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The value of familiarity: Effects of knowledge and objective signals on willingness to pay for a public good

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Listed:
  • LaRiviere, Jacob
  • Czajkowski, Mikołaj
  • Hanley, Nick
  • Aanesen, Margrethe
  • Falk-Petersen, Jannike
  • Tinch, Dugald

Abstract

We design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. We find that the causal effect of objective signals about the accuracy of a subject׳s knowledge for a public good can dramatically affect their valuation for it: treatment caused a significant increase of $85–$129 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states.

Suggested Citation

  • LaRiviere, Jacob & Czajkowski, Mikołaj & Hanley, Nick & Aanesen, Margrethe & Falk-Petersen, Jannike & Tinch, Dugald, 2014. "The value of familiarity: Effects of knowledge and objective signals on willingness to pay for a public good," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 376-389.
  • Handle: RePEc:eee:jeeman:v:68:y:2014:i:2:p:376-389
    DOI: 10.1016/j.jeem.2014.07.004
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    More about this item

    Keywords

    Information; Beliefs; Field experiment; Valuation; Uncertainty; Choice experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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