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The effect of knowledge on the disparity between hypothetical and real willingness to pay


  • Massimo Paradiso
  • Antonella Trisorio


The use of a contingent valuation (CV) method is controversial among economists because it is based on hypothetical rather than real economic choices. This paper reports the results of an experiment designed to elicit the real and the hypothetical willingness to pay (WTP) for a private good. The effect of different settings of knowledge (direct and indirect) of the good on subjects' valuation behaviour are investigated. The findings show that (i) a direct knowledge of the good reduces the observed disparity between hypothetical and real WTP; and that (ii) different settings of knowledge generate different perceptions of the characteristics of the good.

Suggested Citation

  • Massimo Paradiso & Antonella Trisorio, 2001. "The effect of knowledge on the disparity between hypothetical and real willingness to pay," Applied Economics, Taylor & Francis Journals, vol. 33(11), pages 1359-1364.
  • Handle: RePEc:taf:applec:v:33:y:2001:i:11:p:1359-1364
    DOI: 10.1080/00036840152478039

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    References listed on IDEAS

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    Cited by:

    1. Murat Isik, 2006. "An experimental analysis of impacts of uncertainty and irreversibility on willingness-to-pay," Applied Economics Letters, Taylor & Francis Journals, vol. 13(2), pages 67-72.
    2. RessurreiĆ§Ć£o, Adriana & Gibbons, James & Dentinho, Tomaz Ponce & Kaiser, Michel & Santos, Ricardo S. & Edwards-Jones, Gareth, 2011. "Economic valuation of species loss in the open sea," Ecological Economics, Elsevier, vol. 70(4), pages 729-739, February.
    3. repec:gam:jsusta:v:9:y:2017:i:6:p:930-:d:100351 is not listed on IDEAS
    4. Jorgensen, Bradley S. & Syme, Geoffrey J. & Nancarrow, Blair E., 2006. "The role of uncertainty in the relationship between fairness evaluations and willingness to pay," Ecological Economics, Elsevier, vol. 56(1), pages 104-124, January.
    5. M. R. Bhatia & J. A. Fox-Rushby, 2003. "Validity of Willingness to Pay: hypothetical versus actual payment," Applied Economics Letters, Taylor & Francis Journals, vol. 10(12), pages 737-740.
    6. Jayson L. Lusk, 2003. "Effects of Cheap Talk on Consumer Willingness-to-Pay for Golden Rice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 840-856.
    7. repec:ebl:ecbull:v:3:y:2004:i:6:p:1-13 is not listed on IDEAS
    8. Kniivila, Matleena, 2006. "Users and non-users of conservation areas: Are there differences in WTP, motives and the validity of responses in CVM surveys?," Ecological Economics, Elsevier, vol. 59(4), pages 530-539, October.
    9. Massimo Finocchiaro Castro, 2004. "Cultural Education and the Voluntary Provision of Cultural Goods: An Experimental Study," Experimental 0404003, EconWPA, revised 27 Oct 2004.
    10. Garces-Voisenat, Juan-Pedro & Mukherjee, Zinnia, 2016. "Paying for green energy: The case of the Chilean Patagonia," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 397-414.
    11. Royalty, Anne Beeson & Hagens, John, 2005. "The effect of premiums on the decision to participate in health insurance and other fringe benefits offered by the employer: evidence from a real-world experiment," Journal of Health Economics, Elsevier, vol. 24(1), pages 95-112, January.
    12. Joseph Little & Robert Berrens, 2004. "Explaining Disparities between Actual and Hypothetical Stated Values: Further Investigation Using Meta-Analysis," Economics Bulletin, AccessEcon, vol. 3(6), pages 1-13.
    13. Joe L. Parcell & Jason R.V. Franken & Maria Cox & David J. Patterson & Richard F. Randle, 2010. "Buyers' perceptions of importance and willingness-to-pay for certain attributes of source and production verified bred heifers," Agricultural Economics, International Association of Agricultural Economists, vol. 41(5), pages 463-470, September.

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