Michigan State University
Institutional Affiliation: Michigan State University
Information about this author at RePEc
NBER Working Papers and Publications
|October 2010||A Dynamic Explanation of the Willingness to Pay and Willingness to Accept Disparity|
with Catherine L. Kling, John A. List: 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