WTA-WTP Disparity: The Role of Perceived Realism of the Valuation Setting

Abstract

Based on a survey among more than 5,000 German households and a single-binary choice experiment in which we randomly split the respondents into two groups, this paper elicits both households' willingness to pay (WTP) for power supply security and their willingness to accept (WTA) compensations for a reduced security level. In accord with numerous empirical studies, we find that the mean WTA value substantially exceeds the mean WTP bid, in our empirical example by a factor of 3.56. Yet, the WTA-WTP ratio decreases to 2.35 among respondents who believe that the hypothetical valuation setting is likely to become true. Conversely, the WTA-WTP ratio increases to 3.81 among respondents who deem the setting unlikely. On the basis of these results, we conclude that inquiring about respondents' perception of the realism of the valuation setting is an easy-to-implement and promising survey element to mitigate excessive WTA-WTP disparities, particularly if private or quasi-public goods are under scrutiny.

Willingness to pay for electronic transaction levy: empirical evidence from Ghana

“…The reason for selecting 2,810 adult population for the study is based on respondents' willingness to voluntarily participate in the survey between the start and end dates of the survey. Further, our sample size yields a nationwide percentage sample of 0.0094% which is comparable to South Korea's 0.0019% (Kim and Yoo, 2020) and Germany's 0.0068% (Frondel et al ., 2019). Admittedly, the snowball approach is not without its weaknesses; however, through the descriptive responses, it is evident that largely, the demographics of the respondents are geographically well-spread, giving credence to the generality of our data.…”