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Uncertainty, Information, and Hedonic Pricing

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  • S. B. Kask
  • S. A. Maani

Abstract

The application of the hedonic pricing technique to estimating consumer values of avoiding or incurring the risk of loss from natural hazards has recently appeared in the literature (e.g., Brookshire et al. 1985; MacDonald, Murdoch, and White 1987). The probabilistic nature of the hazards evaluated in these studies raise new questions regarding the interpretation of the hedonic prices estimated. We present a hedonic price model that accounts for information level and uncertainty when valuing nonmarket goods. A simple set of rules are derived for analyzing hedonic prices for probabilistic nonmarket goods.

Suggested Citation

  • S. B. Kask & S. A. Maani, 1992. "Uncertainty, Information, and Hedonic Pricing," Land Economics, University of Wisconsin Press, vol. 68(2), pages 170-184.
  • Handle: RePEc:uwp:landec:v:68:y:1992:i:2:p:170-184
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    References listed on IDEAS

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    Cited by:

    1. Naoi, Michio & Seko, Miki & Sumita, Kazuto, 2009. "Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 658-669, November.
    2. Hite, Diane, 2000. "Information Impacts On Stated Vs. Revealed Preference Valuation Of Environmental Quality," 2000 Annual meeting, July 30-August 2, Tampa, FL 21791, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Meinard, Yves & Grill, Philippe, 2011. "The economic valuation of biodiversity as an abstract good," Ecological Economics, Elsevier, vol. 70(10), pages 1707-1714, August.
    4. Charles Ka Yui LEUNG & Wai Yip MA & Jun ZHANG, 2014. "The Market Valuation of Interior Design and Developer Strategies: A Simple Theory and Some Evidence," International Real Estate Review, Asian Real Estate Society, vol. 17(1), pages 63-107.
    5. Christopher F. Parmeter & Jaren C. Pope, 2013. "Quasi-experiments and hedonic property value methods," Chapters,in: Handbook on Experimental Economics and the Environment, chapter 1, pages 3-66 Edward Elgar Publishing.
    6. Luca D’Acci, 2014. "Monetary, Subjective and Quantitative Approaches to Assess Urban Quality of Life and Pleasantness in Cities (Hedonic Price, Willingness-to-Pay, Positional Value, Life Satisfaction, Isobenefit Lines)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 115(2), pages 531-559, January.
    7. Hayato Nakanishi, 2017. "Quasi-experimental evidence for the importance of accounting for fear when evaluating catastrophic events," Empirical Economics, Springer, pages 869-894.
    8. Turnquist, Alan & Fortenbery, T. Randall & Foltz, Jeremy D., 2008. "Progress or Devastation? The Effects of Ethanol Plant Location on Local Land Use," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6125, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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