The scope trials: Variation in sensitivity to scope and WTP with directionally bounded utility functions

Amiran, Edoh Y.; Hagen, Daniel A.

doi:10.1016/j.jeem.2009.06.003

Cited by 23 publications

(27 citation statements)

References 3 publications

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“…one cannot at all levels of a particular good fully compensate an individual for a certain reduction of the good by an increase in another good (such as money). In a more recent paper (Amiran and Hagen, 2010), the authors extend the analysis of such bounded utility functions to another phenomenon often observed in the CV literature, the limited sensitivity to scope. Specifically, they show that one cannot, based on standard consumer theory, rule out arbitrarily small degrees of sensitivity to scope for this class of utility functions.…”

Section: Introductionmentioning

confidence: 99%

The willingness to pay–willingness to accept gap revisited: The role of emotions and moral satisfaction

Biel

Johansson‐Stenman

Nilsson

2011

Journal of Economic Psychology

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Abstract. While many earlier studies have found that people's maximum willingness to pay for having a good is often substantially lower than their minimum willingness to accept not having it, more recent experimental evidence suggests that this discrepancy vanishes for standard consumption goods when an incentive-compatible design without misconceptions is used. This paper hypothesises that there is nevertheless a discrepancy for goods with a perceived moral character, such as contributions to a good cause, and moreover that the reason for this discrepancy can largely be explained by differences in emotions and moral perceptions. The results from a real-money dichotomous-choice experiment, combined with measurements of emotions and morality, are consistent with these hypotheses. JEL: C91; H41

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Section: Introductionmentioning

confidence: 99%

The willingness to pay–willingness to accept gap revisited: The role of emotions and moral satisfaction

Biel

Johansson‐Stenman

Nilsson

2011

Journal of Economic Psychology

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“…The existence of universal hypersubstitutability, implicit in functions such as the Cobb-Douglas, seems highly implausible. While it may appear that this property only has implications at extreme levels of consumption, it has been shown to have important implications in contexts where the changes in consumption quantities are not large [8] [9].…”

Section: Directionally Bounded Utilitymentioning

confidence: 99%

“…In what follows we make use of the formal definition of directionally bounded utility first proposed by Amiran and Hagen [9]. Consider a utility function ( ) , u q w that depends continuously on non-market and market goods whose consumption levels are ( )…”

Section: Directionally Bounded Utilitymentioning

confidence: 99%

Directionally Bounded Utility and the Executive Pay Puzzle

Amiran¹,

Hagen²

2015

TEL

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The pay of CEOs and other top executives has risen disproportionately relative to other earnings. We provide a supply-side explanation based on utility theory using directionally bounded utility functions. As overall income levels have grown, the amount of compensation required to induce top executives to sacrifice a quiet life has risen. We show that directionally bounded utility functions predict a general rise in compensation for stress. More importantly, such utility functions can be used to explain why the CEO pay ratio has risen at an increasing rate, something which other approaches have difficulty explaining.

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“…comparing mean WTP for those who received 4.5% and 10% as their second WTP question). 25 Putting too much weight on the lack of external scope as a sign of unreliable data would be too simplistic, as there may be good reasons for not having higher WTP for the 10% plan compared to the 4.5% plan (Amiran and Hagen, 2010;Lindhjem, 2007). Marginal existence value may be diminishing (Rollins and Lyke 1998) or respondents may even feel that as long as a sufficient amount of biodiversity is preserved for the species not to be threatened anymore, it is good enough (Jacobsen et al, 2012).…”

Section: Estimation Of Benefitsmentioning

confidence: 99%

The social benefits and costs of preserving forest biodiversity and ecosystem services

Lindhjem

Grimsrud

Navrud

et al. 2014

Journal of Environmental Economics and Policy

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Ecologists recommend preserving a larger share of the old-growth forests in Norway, as half of the species have forests as their main habitat. However, progress has been slow and at the time of this study only 1.4 % of the productive forest area had been preserved. We investigate benefits and costs over a 50-year period of increasing this level to 2.8% (doubling), 4.5% ("ecologists' minimum") and 10% (goal suggested in public debate). The benefits are estimated based on a national contingent valuation (CV) survey of Norwegian households. Two independent measures of total costs are used; i) the actual compensation amounts paid to forest owners, and ii) results from a survey of forest owners' minimum willingness-to-accept compensation to preserve. Results show that social benefits outweigh costs of all three conservation plans by a large margin. The middle option of 4.5% has the highest net present value. The results are robust to a range of assumptions, including considerations of potential hypothetical bias in benefit estimates. The results of this cost-benefit analysis reflect the preferences of the general population, the authorities and the forest owners with respect to biodiversity and ecosystem services preservation, and supplement the expert opinion of ecologists.

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The scope trials: Variation in sensitivity to scope and WTP with directionally bounded utility functions

Cited by 23 publications

References 3 publications

The willingness to pay–willingness to accept gap revisited: The role of emotions and moral satisfaction

The willingness to pay–willingness to accept gap revisited: The role of emotions and moral satisfaction

Directionally Bounded Utility and the Executive Pay Puzzle

The social benefits and costs of preserving forest biodiversity and ecosystem services

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