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On the origin of the wta-wtp divergence in public good valuation

Author

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  • Emmanuel Flachaire

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Guillaume Hollard

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Jason Shogren

    (Departement Economy and Finance, University of Wyoming - UW - University of Wyoming)

Abstract

This paper tests whether individual perceptions of markets as good or bad for a public good is correlated with the propensity to report gaps in willingness to pay (WTP) and willingness to accept (WTA) revealed within an incentive compatible mechanism. Identifying people based on a notion of market affinity, we find a substantial part of the gap can be explained by controlling for some variables that were not controlled for before. This result suggests the valuation gap for public goods can be reduced through well-defined variables.

Suggested Citation

  • Emmanuel Flachaire & Guillaume Hollard & Jason Shogren, 2011. "On the origin of the wta-wtp divergence in public good valuation," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00561474, HAL.
    • Handle: RePEc:hal:pseose:halshs-00561474
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00561474
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    References listed on IDEAS

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    1. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-270, March.
    2. Cherry, Todd L. & Crocker, Thomas D. & Shogren, Jason F., 2003. "Rationality spillovers," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 63-84, January.
    3. Graham Loomes & Chris Starmer & Robert Sugden, 2003. "Do Anomalies Disappear in Repeated Markets?," Economic Journal, Royal Economic Society, vol. 113(486), pages 153-166, March.
    4. Charles R. Plott & Kathryn Zeiler, 2005. "The Willingness to Pay–Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations," American Economic Review, American Economic Association, vol. 95(3), pages 530-545, June.
    5. Shogren, Jason F. & Cho, Sungwon & Koo, Cannon & List, John & Park, Changwon & Polo, Pablo & Wilhelmi, Robert, 2001. "Auction mechanisms and the measurement of WTP and WTA," Resource and Energy Economics, Elsevier, vol. 23(2), pages 97-109, April.
    6. Don L. Coursey & John L. Hovis & William D. Schulze, 1987. "The Disparity Between Willingness to Accept and Willingness to Pay Measures of Value," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(3), pages 679-690.
    7. Hanemann, W Michael, 1991. "Willingness to Pay and Willingness to Accept: How Much Can They Differ?," American Economic Review, American Economic Association, vol. 81(3), pages 635-647, June.
    8. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, March.
    9. Sayman, Serdar & Onculer, Ayse, 2005. "Effects of study design characteristics on the WTA-WTP disparity: A meta analytical framework," Journal of Economic Psychology, Elsevier, vol. 26(2), pages 289-312, April.
    10. Smith, Vernon L, 1991. "Rational Choice: The Contrast between Economics and Psychology," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 877-897, August.
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    Cited by:

    1. Christian A. Vossler & Stéphane Bergeron & Maurice Doyon & Daniel Rondeau, 2023. "Revisiting the Gap between the Willingness to Pay and Willingness to Accept for Public Goods," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(2), pages 413-445.
    2. Blignaut, James & Mander, Myles & Inglesi-Lotz, Roula & Glavan, Jane & Parr, Stephen, 2016. "The amenity value of Abu Dhabi's coastal and marine resources to its beach visitors," Ecosystem Services, Elsevier, vol. 19(C), pages 32-41.
    3. Pierre-Alexandre Mahieu & Romain Craste & Bengt Kriström & Pere Riera, 2014. "Non-market valuation in France: An overview of the research activity," Working Papers hal-01087365, HAL.

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