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Eliciting and utilizing willingness to pay: evidence from field trials in Northern Ghana

  • Gregory Fischer
  • James Berry
  • Raymond Guiteras
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    We utilize the Becker-DeGroot-Marschak (1964) mechanism to estimate the willingness to pay for clean drinking water technology in northern Ghana. The BDM mechanism has attractive properties for empirical research, allowing us to directly estimate demand, compute heterogeneous treatment effects, and study the screening and causal effects of prices with minor modifications to a standard field experiment setting. We demonstrate the implementation of BDM along these three dimensions, compare it to the standard take-it-or-leave it method for eliciting willingness to pay, and discuss practical issues for implementing the mechanism in true field settings.

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    File URL: http://eprints.lse.ac.uk/47913/
    File Function: Open access version.
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    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 47913.

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    Date of creation: 07 Apr 2012
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    Handle: RePEc:ehl:lserod:47913
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    Web page: http://www.lse.ac.uk/

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    1. John Shea, 1996. "Instrument Relevance in Multivariate Linear Models: A Simple Measure," NBER Technical Working Papers 0193, National Bureau of Economic Research, Inc.
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    7. Vivian Hoffmann, 2009. "Intrahousehold Allocation of Free and Purchased Mosquito Nets," American Economic Review, American Economic Association, vol. 99(2), pages 236-41, May.
    8. Jessica Cohen & Pascaline Dupas, 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 1-45, February.
    9. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    10. Gul, Faruk, 1991. "A Theory of Disappointment Aversion," Econometrica, Econometric Society, vol. 59(3), pages 667-86, May.
    11. Irwin, Julie R, et al, 1998. "Payoff Dominance vs. Cognitive Transparency in Decision Making," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 272-85, April.
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