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Are Stated Preferences Good Predictors of Market Behavior?

  • Maria L. Loureiro
  • Jill J. McCluskey
  • Ron C. Mittelhammer

Using an economic experiment in conjunction with a survey, we analyze whether consumers’ hypothetical willingness-to-pay responses are effective predictors of actual market behavior. We model revealed preferences as a function of socio-demographic characteristics and instrumental variables that represent the intensity of stated preferences. Our findings show that consumers who state that they are willing to pay a premium, which is equal to or greater than a positive lower bound, have a higher likelihood of actually buying the product in question. This implies that consumers’ actions in the economic experiment validate their survey responses.

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File URL: http://le.uwpress.org/cgi/reprint/79/1/44
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 79 (2003)
Issue (Month): 1 ()
Pages: 44-45

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Handle: RePEc:uwp:landec:v:79:y:2003:i:1:p:44-45
Contact details of provider: Web page: http://le.uwpress.org/

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