NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Dynamic Explanation of the Willingness to Pay and Willingness to Accept Disparity

Catherine L. Kling, John A. List, Jinhua Zhao

NBER Working Paper No. 16483
Issued in October 2010
NBER Program(s):   EEE   PE

Evidence from laboratory experiments suggests that important disparities exist between willingness to pay (WTP) and compensation demanded for the same good. This study advances, and experimentally tests, a new explanation of the WTP/WTA disparity—a dynamic theory based on the presence of commitment costs. We find that the commitment cost theory combined with a simple behavioral anomaly is able to lend insights into the causes and severity of the WTA/WTP disparity. Further, we find that market experience attenuates the behavioral anomaly, consistent with the notion that no value disparity exists for agents with sufficient market experience.

download in pdf format
   (198 K)

email paper

This paper is available as PDF (198 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16483

Published: Catherine L. Kling & John A. List & Jinhua Zhao, 2013. "A Dynamic Explanation Of The Willingness To Pay And Willingness To Accept Disparity," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 909-921, 01. citation courtesy of

Users who downloaded this paper also downloaded these:
List w16908 Does Market Experience Eliminate Market Anomalies? The Case of Exogenous Market Experience
Alevy, List, and adamowicz w16036 How Can Behavioral Economics Inform Non-Market Valuation? An Example from the Preference Reversal Literature
Bachmann, Berg, and Sims w17958 Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence
Cawley w12510 Contingent Valuation Analysis of Willingness to Pay To Reduce Childhood Obesity
Benjamin, Heffetz, Kimball, and Rees-Jones w16489 Do People Seek to Maximize Happiness? Evidence from New Surveys
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us