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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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  1. Karen Blumenschein & Magnus Johannesson & Glenn C. Blomquist & Bengt Liljas & Richard M. O’Conor, 1998. "Experimental Results on Expressed Certainty and Hypothetical Bias in Contingent Valuation," Southern Economic Journal, Southern Economic Association, vol. 65(1), pages 169-177, July.
  2. V. Kerry Smith, 1993. "Nonmarket Valuation of Environmental Resources: An Interpretive Appraisal," Land Economics, University of Wisconsin Press, vol. 69(1), pages 1-26.
  3. John Loomis, 1993. "An investigation into the reliability of intended visitation behavior," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(2), pages 183-191, April.
  4. Alan Randall, 1994. "Difficulty with the Travel Cost Method," Land Economics, University of Wisconsin Press, vol. 70(1), pages 88-96.
  5. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May.
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