Tests of market outcomes with asymmetric valuations of gains and losses: Smaller gains, fewer trades, and less value

Borges, Bernhard; Knetsch, Jack L.

doi:10.1016/s0167-2681(97)00090-5

Cited by 34 publications

(15 citation statements)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The relevance of the WTA-WTP disparity for cost-benefit analysis as well as for the understanding of markets and individual decision making has been emphasized by a number of authors (Borges and Knetsch, 1998;Kahneman et al, 1990Kahneman et al, , 1991Knetsch, 1989Knetsch, , 1990Knetsch, , 1992Knetsch, , 1995Knetsch, , 2000Sinden, 1984, 1987).…”

Section: Introductionmentioning

confidence: 99%

An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries

Schmidt

Traub

2007

Theory Decis

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: In this paper we experimentally investigate the disparity between willingness-toaccept (WTA) and willingness-to-pay (WTP) for risky lotteries. The direction of the income effect is reversed by endowing subjects with the highest price of a lottery when asking the WTP question. Our results show that the income effect is too small to be the only source of the disparity. Since the disparity concentrates on a subsample of subjects, parametric and nonparametric tests of the WTA-WTP ratio may lead to contradictory results. The disparity is significantly reduced when background risk is introduced. That is, putting subjects always into a risky position could improve the contingent valuation method which is often concerned with the assessment of risky situations such as health risks, automobile safety, etc. Terms of use: Documents in EconStor may

show abstract

Section: Introductionmentioning

confidence: 99%

An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries

Schmidt

Traub

2007

Theory Decis

View full text Add to dashboard Cite

show abstract

“…This interpretation is put forward by most WTA/WTP studies (e.g. Thaler, 1980;Knetsch and Sinden, 1984;Coursey et al, 1987;Borges and Knetsch, 1998;Knetsch et al, 2001;Brown, 2005). Surprisingly, to our knowledge, there is no study that relates the WTA/WTP-ratio to a direct measure of loss aversion.…”

Section: Hypothesismentioning

confidence: 88%

The Willingness to Pay, Accept and Retire

Schreiber

Weber

2014

SSRN Journal

View full text Add to dashboard Cite

Today's pay-as-you-go social security systems are put under pressure due to increasing life expectancy, the baby boomers generation entering retirement and a decreasing effective retirement age. In most developed countries workers retire remarkably earlier than the full retirement age, even if economic reasons suggest not to. Conducting a large online survey, this paper relates the willingness-to-accept/ willingness-to-pay disparity to the retirement decision and shows that the presentation of the decision problem strongly influences the outcome. The willingness-to-accept late retirement is more than twice as high as the corresponding willingness-to-pay. We also show that this disparity is driven by loss aversion. Using the reduction in German social security benefits for early retirement as a market price also shows that the presentation in a willingness-to-accept frame can induce early retirement. Results are robust when the analysis is repeated with a representative panel survey for Germany (SAVE panel).Keywords: Retirement Decision, Willigness-to-pay, Willigness-to-accept, Social Security April 2014 AcknowledgementsWe would like to thank the Frankfurter Allgemeine Zeitung for conducting the study with us. Intensive discussion with two journalists, Anne-Christin Sievers and Patrick Bernau, helped to considerably improve the questionnaire. We also would like to thank Sven Nolte for helpful comments and seminar participants at the University of Mannheim for their valuable suggestions.

show abstract

“…Grazing permits are generally not traded, although they do get capitalized in ranch values, so it is difficult to determine their true value. Research by Borges and Knetsch (1998) does suggest one reason why little trading of grazing permits occurs: those holding permits value them more highly than those wanting to buy them.…”

Section: Grazing On Public Range and The Nevada Ranch Surveymentioning

confidence: 99%

“…As a first indication of the relation between the WTP and WTA valuations, we consider the Pearson correlation coefficient, which is 0.21 for our sample and approximately in the range reported by Borges and Knetsch (1998).…”

Section: Statistical Tests Of the Divergence Between Welfare Measuresmentioning

confidence: 99%

What accounts for the divergence between ranchers' WTA and WTP for public forage?

Sun

Kooten

Voss

2009

Forest Policy and Economics

View full text Add to dashboard Cite

Tests of market outcomes with asymmetric valuations of gains and losses: Smaller gains, fewer trades, and less value

Cited by 34 publications

References 22 publications

An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries

An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries

The Willingness to Pay, Accept and Retire

What accounts for the divergence between ranchers' WTA and WTP for public forage?

Contact Info

Product

Resources

About