NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Catherine Kling

Cornell University
464 Warren Hall
Ithaca, NY 14853

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Iowa State University

NBER Working Papers and Publications

October 2010A Dynamic Explanation of the Willingness to Pay and Willingness to Accept Disparity
with John A. List, Jinhua Zhao: w16483
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.

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

 
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