This paper contributes to the widespread discussion of the sources of the divergence between WTA and WTP values. The theoretical and empirical investigations show that value and outcome uncertainty offer an explanation for this disparity. Given a set of hypotheses generated by the theory, the paper investigates the disparity using an induced-value experimental laboratory setting. The incentive-...

A finite probability mixture model is combined with a contingent valuation model to analyze the existence of differential market segments in a hypothetical market. The approach has at least two principle benefits. First, the model is capable of identifying market segments within the hypothetical market. Second, the model can be used to estimate WTP/WTA within each segment. The model is illustra...

This paper contributes to the widespread discussion of the sources of the divergence between WTA and WTP values. The paper reports on theoretical and empirical investigations which show that value and outcome uncertainty offer an explanation for this disparity. Given a set of hypotheses generated by the theory, the paper investigates the disparity using an inducedvalue experimental laboratory s...

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 concent...

ing from the sentimental value of the gift: If you would not have received the gift, how much would you be willing to pay to obtain it? In two other versions of the survey, to obtain a measure of their WTA, we asked the students instead Abstracting the sentimental value of the gift: How much would somebody have to pay you to induce you giving the gift away?ing the sentimental value of the gift:...

Many empirical studies have demonstrated large discrepancies between willingness to accept (WTA) and willingness to pay (WTP) measures. This paper examines the extent to which uncertainty about the environmental quality improvement can lead to a divergence between WTP and WTA measures. Indirect utility function parameters and uncertainty about the environmental quality change affect the extent ...

We consider goodness-of-fit tests with i.i.d. samples generated from a categorical distribution (p1, ..., pk). We test the null hypothesis whether pj = qπ(j) for some label permutation π. The uncertainty of label permutation implies that the null hypothesis is composite instead of being singular. In this paper, we construct a testing procedure using statistics that are defined as indefinite int...

Contingent Valuation studies, in which respondents are presented with a hypothetical choice, can be prone to hypothetical bias as respondents could overstate their willingness to pay. The purpose of this paper is to present a method to detect hypothetical bias in the single bound dichotomous choice model. The method borrows the tools from the stochastic frontier model, as in the case of Hofler ...

Most researchers want evidence for the direction of an effect, not evidence against a point null hypothesis. Such evidence is ideally on a scale that is easily interpretable, with an accompanying standard error. Further, the evidence from identical experiments should be repeatable, and evidence from independent experiments should be easily combined, such as required in meta-analysis. Such a mea...

In doing normative environmental economics economists usually use WTP figures for losses when WTA figures are correct. We puzzle over moral issues involved in using discount rates and worry about equity effect not normally considered in benefit cost analysis. We wonder if individuals who will never use an amenity should have their existence values counted and if so if then we should also count ...