Pricing risk and ambiguity: The effect of perspective taking
There is a large literature showing that willingness-to-accept (WTA) is usually much higher than willingness-to-pay (WTP) in empirical studies although they should be roughly equal according to traditional economic theory. A second stream of literature shows that people are typically ambiguity averse, i.e. they prefer lotteries with known probabilities over lotteries with unknown ones. Our study combines both streams of literature and analyzes whether there is an interaction between the WTP-WTA disparity and ambiguity aversion
|Date of creation:||Aug 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 431 8814-1
Fax: +49 431 85853
Web page: http://www.ifw-kiel.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mercè Roca & Robin Hogarth & A. Maule, 2006.
"Ambiguity seeking as a result of the status quo bias,"
Journal of Risk and Uncertainty,
Springer, vol. 32(3), pages 175-194, May.
- Mercè Roca & Robin Hogarth & A. John Maule, 2005. "Ambiguity seeking as a result of the status quo bias," Economics Working Papers 882, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2006.
- Frank, Richard G. & Zeckhauser, Richard J., 2007.
"Custom-made versus ready-to-wear treatments: Behavioral propensities in physicians' choices,"
Journal of Health Economics,
Elsevier, vol. 26(6), pages 1101-1127, December.
- Richard G. Frank & Richard J. Zeckhauser, 2007. "Custom Made Versus Ready to Wear Treatments; Behavioral Propensities in Physician's Choices," NBER Working Papers 13445, National Bureau of Economic Research, Inc.
- Zeelenberg, M. & van Dijk, E. & van den Bos, K. & Pieters, R., 2002. "The Inaction Effect in the Psychology of Regret," Other publications TiSEM a29106c0-2319-4f60-b213-8, Tilburg University, School of Economics and Management.
- Traub, Stefan & Schmidt, Ulrich, 2006.
"An Experimental Investigation of the Disparity between WTA and WTP for Lotteries,"
Economics Working Papers
2006,09, Christian-Albrechts-University of Kiel, Department of Economics.
- Ulrich Schmidt & Stefan Traub, 2009. "An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries," Theory and Decision, Springer, vol. 66(3), pages 229-262, March.
- Schmidt, Ulrich & Traub, Stefan, 2009. "An experimental investigation of the disparity between WTA and WTP for lotteries," Open Access Publications from Kiel Institute for the World Economy 28786, Kiel Institute for the World Economy (IfW).
- Schmidt, Ulrich & Starmer, Chris & Sugden, Robert, 2008.
"Third-generation prospect theory,"
Open Access Publications from Kiel Institute for the World Economy
28932, Kiel Institute for the World Economy (IfW).
- Stefan T. Trautmann & Ferdinand M. Vieider & Peter P. Wakker, 2011. "Preference Reversals for Ambiguity Aversion," Management Science, INFORMS, vol. 57(7), pages 1320-1333, July.
When requesting a correction, please mention this item's handle: RePEc:kie:kieliw:1727. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dieter Stribny)
If references are entirely missing, you can add them using this form.