The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Goods
This paper develops a model of demand estimation in which consumers learn about their true 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 quasi-public goods. We find that the predictions of the theoretical exercise that additional experience with a good will make consumers more certain over their preferences in both mean and variance are supported in each case.
|Date of creation:||2012|
|Contact details of provider:|| Postal: ul. Dluga 44/50, 00-241 Warszawa|
Phone: (+48 22) 55 49 144
Fax: (+48 22) 831 28 46
Web page: http://www.wne.uw.edu.pl/
More information through EDIRC
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.:
- Whitehead John C. & Blomquist Glenn C. & Hoban Thomas J. & Clifford William B., 1995. "Assessing the Validity and Reliability of Contingent Values: A Comparison of On-Site Users, Off-Site Users, and Non-users," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 238-251, September.
- Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
- Hanley, Nick & Czajkowski, Mikolaj & Hanley-Nickolls, Rose & Redpath, Steve, 2010. "Economic values of species management options in human-wildlife conflicts: Hen Harriers in Scotland," Ecological Economics, Elsevier, vol. 70(1), pages 107-113, November.
- Fosgerau, Mogens, 2006.
"Investigating the distribution of the value of travel time savings,"
Transportation Research Part B: Methodological,
Elsevier, vol. 40(8), pages 688-707, September.
- Mogens Fosgerau, 2004. "Investigating the distribution of the value of travel time savings," Urban/Regional 0410005, EconWPA, revised 25 Nov 2004.
- Mogens Fosgerau, 2004. "Investigating the distribution of the value of travel time savings," Urban/Regional 0411006, EconWPA.
- Denzil G. Fiebig & Michael P. Keane & Jordan Louviere & Nada Wasi, 2010. "The Generalized Multinomial Logit Model: Accounting for Scale and Coefficient Heterogeneity," Marketing Science, INFORMS, vol. 29(3), pages 393-421, 05-06.
- Cameron, Trudy Ann & Englin, Jeffrey, 1997. "Respondent Experience and Contingent Valuation of Environmental Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 296-313, July.
- Trudy Ann Cameron & Jeffrey Englin, 1996. "Respondent Experience and Contingent Valuation of Environmental Goods," UCLA Economics Working Papers 752, UCLA Department of Economics.
- Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters,in: Handbook of Choice Modelling, chapter 9, pages 202-235 Edward Elgar Publishing.
- Tülin Erdem & Michael P. Keane, 1996. "Decision-Making Under Uncertainty: Capturing Dynamic Brand Choice Processes in Turbulent Consumer Goods Markets," Marketing Science, INFORMS, vol. 15(1), pages 1-20.
- Gregory S. Crawford & Matthew Shum, 2005. "Uncertainty and Learning in Pharmaceutical Demand," Econometrica, Econometric Society, vol. 73(4), pages 1137-1173, 07.
- Nick Hanley & Robert Wright & Gary Koop, 2002. "Modelling Recreation Demand Using Choice Experiments: Climbing in Scotland," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 449-466, July.
- Monroe, Kent B, 1976. " The Influence of Price Differences and Brand Familiarity on Brand Preferences," Journal of Consumer Research, Oxford University Press, vol. 3(1), pages 42-49, June.
- Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2005. "Information Acquisition: Experimental Analysis of a Boundedly Rational Model," Levine's Bibliography 666156000000000480, UCLA Department of Economics.
- Nick Hanley & Bengt Kriström & Jason F. Shogren, 2009. "Coherent Arbitrariness: On Value Uncertainty for Environmental Goods," Land Economics, University of Wisconsin Press, vol. 85(1), pages 41-50.
- W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
- Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 37-82.
- Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
- Daniel McFadden, 1976. "The Revealed Preferences of a Government Bureaucracy: Empirical Evidence," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 55-72, Spring.
- Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
- Matthew Osborne, 2011. "Consumer learning, switching costs, and heterogeneity: A structural examination," Quantitative Marketing and Economics (QME), Springer, vol. 9(1), pages 25-70, March.
- Michelle Sovinsky Goeree, 2008. "Limited Information and Advertising in the U.S. Personal Computer Industry," Econometrica, Econometric Society, vol. 76(5), pages 1017-1074, 09.
- Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
- Daniel A. Ackerberg, 2003. "Advertising, learning, and consumer choice in experience good markets: an empirical examination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1007-1040, 08.
- Boyle Kevin J. & Welsh Michael P. & Bishop Richard C., 1993. "The Role of Question Order and Respondent Experience in Contingent-Valuation Studies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 80-99, July. Full references (including those not matched with items on IDEAS)