Accurate Valuation in the Absence of Markets
Incomplete markets do not provide accurate information about people's subjective valuations of goods. Knowledge of these subjective valuations is often important, however, for example when compensation payments for damaged or destroyed property are required. We argue that in such cases, an attractive measure of the value of a good is the reservation price of the owner, who is generally the person who values it most highly. If a property is sufficiently unique so that there is no market price that can be used as an approximation, then the only way to learn this subjective reservation price is to have the owner self-assess his property. We describe a mechanism that provides an incentive for the owner to self-assess his property honestly without requiring that the property's value be objectively observable.
Volume (Year): 36 (2008)
Issue (Month): 3 (May)
|Contact details of provider:|
When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:36:y:2008:i:3:p:334-358. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.