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Value learning and the willingness to accept - willingness to pay disparity


Kingsley, David C.; Brown, Thomas C. 2013. Value learning and the willingness to accept - willingness to pay disparity. Economics Letters. 120: 473-476.

doi: 10.1016/j.econlet.2013.05.034

The assumption that individual preferences are rational and consistent with standard economic theory is often appropriate, but may be optimistic if consumers are uncertain about either their preferences or how the market operates. Both sources of uncertainty may present themselves in lab experiments exploring the well-known disparity between individuals' willingness to accept and willingness to pay. This paper explores the role of value uncertainty in the observed disparity, and finds that providing subjects with a value learning opportunity can reduce the value disparity to insignificance.

Keywords: discovered preference hypothesis, value uncertainty, value learning, willingness to accept-willingness to pay disparity, paired comparison experiments


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http://www.fs.fed.us/rm/pubs_other/rmrs_2013_kingsley_d001.pdf

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Title: RMRS Other Publications: Value learning and the willingness to accept - willingness to pay disparity
Electronic Publish Date: October 17, 2013
Last Update:
October 17, 2013

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