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The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Environmental Goods

Listed author(s):
  • Czajkowski, Mikolaj
  • Hanley, Nicholas
  • LaRiviere, Jacob

This paper develop and estimates a model of demand estimation for environmental public goods which allows for consumers to learn about their preferences through consumption experiences. We develop a theoretical model of Bayesian updating, perform comparative statics over the model, and show how the theoretical model can be consistently incorporated into a reduced form econometric model. We then estimate the model using data collected for two environmental goods. We find that the predictions of the theoretical exercise that additional experience makes consumers more certain over their preferences in both mean and variance are supported in each cas e.

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File URL: http://hdl.handle.net/1893/17364
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Paper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2013-11.

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Date of creation: Oct 2013
Handle: RePEc:stl:stledp:2013-11
Contact details of provider: Postal:
Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA

Phone: +44 (0)1786 467473
Fax: +44 (0)1786 467469
Web page: http://www.econ.stir.ac.uk/

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