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Willingness to pay

Willingness to pay (WTP) is the maximum amount of money that an individual is willing to sacrifice to acquire a good, service, or benefit, or to avoid a disbenefit, serving as a core measure of economic value in consumer preferences and decision-making.^[1] In economic theory, WTP represents the marginal rate of substitution between a desired attribute and the marginal utility of income, effectively quantifying the monetary value placed on a choice or outcome.^[1] WTP plays a pivotal role across multiple disciplines, including environmental economics, where it is used to assess the value of non-market resources such as biodiversity preservation or improved water quality through methods like contingent valuation.^[1] In marketing and business strategy, it informs pricing decisions by revealing consumer valuations for products, often elicited via conjoint analysis or surveys to optimize revenue.^[2] Additionally, in public policy and regulatory analysis, WTP serves as a benefits metric for evaluating government expenditures and interventions, such as health programs or infrastructure projects, by comparing it against costs to determine societal welfare impacts.^[3] The concept distinguishes between use values (direct benefits from consumption), option values (potential future use), and non-use values (intrinsic or bequest motivations), enabling comprehensive valuation of both private and public goods.^[1] WTP can be measured through stated preference approaches, which involve hypothetical scenarios like choice experiments, or revealed preference methods, such as hedonic pricing that infers values from observed market behaviors.^[1] These techniques are essential for addressing market failures and informing evidence-based decisions in resource allocation.^[2]

Definition and Fundamentals

Core Definition

Willingness to pay (WTP), often abbreviated as such in economic literature, refers to the maximum price at or below which a consumer will definitely buy one unit of a product or service, serving as a measure of the perceived value or utility derived from it.^[4] This concept captures the highest monetary amount an individual is prepared to forgo to obtain a good, service, or outcome, thereby indicating their valuation based on personal preferences and circumstances.^[5] Unlike the actual price paid in a transaction, WTP represents the consumer's reservation price—the threshold beyond which they would forgo the purchase—while the transaction price is determined by market dynamics such as supply, demand, and competition, often resulting in a lower amount paid.^[6] This distinction is central to understanding consumer behavior, as the gap between WTP and the market price forms the basis for consumer surplus, where buyers benefit from paying less than their maximum valuation.^[7] At its core, WTP encompasses a monetary component as the primary metric, but in broader economic contexts, it can extend to non-monetary trade-offs, such as the time or effort a consumer is willing to invest as equivalents to financial sacrifice.^[8] The concept originates from the late 19th century work of British economist Alfred Marshall in his seminal work Principles of Economics (1890), where he discussed the maximum amount a consumer would pay rather than go without a good, integrating it into the framework of marginal utility theory to explain consumer demand and surplus; the specific term "willingness to pay" became widely used in economic literature during the 20th century.^[7] Consumer surplus is a key economic measure that captures the net benefit consumers derive from purchasing goods or services at prices below their maximum willingness to pay (WTP). It is defined as the difference between the total amount consumers are willing to pay for a given quantity and the actual amount they do pay, often visualized and calculated as the area beneath the demand curve and above the equilibrium price line. This concept, formalized by Alfred Marshall in his seminal work, highlights the welfare implications of market transactions where consumers gain value exceeding their expenditure.^[9]^[10] Closely related is the reservation price, which denotes the highest price an individual is prepared to pay for a specific good or service and is frequently synonymous with WTP in single-unit demand contexts. In scenarios involving multiple units, reservation prices extend to reflect varying valuations across quantities, bridging to the notion of marginal WTP. This terminology emphasizes the threshold at which a consumer shifts from non-participation to acquisition in a market.^[11] The demand curve itself emerges from aggregating individual WTP values across consumers, plotting the maximum price each is willing to pay against corresponding quantities, which yields the curve's downward slope due to differing valuations. This derivation underscores how heterogeneous consumer preferences form market-level demand, with higher prices excluding lower-WTP buyers. Marginal WTP, in turn, captures the incremental valuation for each additional unit consumed, decreasing progressively in line with the law of diminishing marginal utility, where successive units provide less additional satisfaction. This pattern of declining marginal WTP is central to explaining the demand curve's shape and consumers' consumption decisions.^[12]^[13]^[14]

Theoretical Framework

Role in Consumer Theory

In the utility maximization framework of consumer theory, individuals select consumption bundles to achieve the highest possible utility subject to a budget constraint, where the price of each good equals the marginal utility per dollar spent across all goods. This equilibrium condition ensures that the marginal utility per dollar is equalized, reflecting the consumer's optimal allocation of resources. Willingness to pay (WTP) emerges as the marginal rate of substitution (MRS) between the good and money, representing the maximum amount of money a consumer is willing to forgo for an additional unit of the good while maintaining the same utility level.^[15]^[16] Formally, for a utility function U(x, m) with x denoting the quantity of the good and m denoting money (treated as a numeraire with price 1), the marginal WTP is derived as the ratio of the marginal utilities:

\text{WTP} = \frac{\partial U / \partial x}{\partial U / \partial m}

This expression captures how the consumer values an incremental unit of the good in monetary terms at the margin.^[15] Graphically, this concept is illustrated using indifference curves and budget lines, where the consumer's optimal bundle occurs at the tangency point between the highest attainable indifference curve and the budget line. The slope of the indifference curve at this point equals the MRS, which corresponds to the WTP for the good relative to money, and matches the slope of the budget line (the price ratio). Indifference curves represent combinations of the good and money yielding equal utility, with their convexity reflecting diminishing marginal rates of substitution.^[16]^[17] Changes in income or prices influence WTP through the income effect and substitution effect, as decomposed in the Slutsky equation. The substitution effect arises from a change in relative prices, prompting the consumer to adjust the bundle along the same indifference curve toward goods offering higher marginal utility per dollar, thereby altering the MRS and WTP. The income effect stems from the shift in real purchasing power due to the price or income change, moving the consumer to a different indifference curve and further modifying WTP depending on whether the good is normal or inferior. For normal goods, both effects typically reinforce each other to increase quantity demanded in response to higher income or lower prices, with the marginal WTP at the new consumption bundle being lower for price decreases due to the downward-sloping demand curve.^[18]

Integration with Welfare Economics

In welfare economics, willingness to pay (WTP) serves as a foundational measure for assessing changes in individual and social welfare, particularly through the concepts of compensating variation (CV) and equivalent variation (EV), which were introduced by John Hicks. CV represents the change in income required to maintain a consumer's original utility level following a price change, effectively capturing the amount an individual would be willing to pay (or receive) to offset the welfare impact of that change.^[19] For instance, in the case of a price increase, CV measures the compensation needed to restore pre-change utility, directly tying WTP to the evaluation of policy-induced welfare losses.^[20] EV, conversely, quantifies the income adjustment necessary to equate utility to the post-change level using a hypothetical scenario at original prices, often derived from stated WTP in contingent valuation contexts. These variations provide path-independent welfare metrics, avoiding the ambiguities of ordinary consumer surplus under income effects, and are central to ex-ante and ex-post analyses of economic interventions. WTP further integrates into welfare economics via consumer surplus, which aggregates individual valuations to gauge total societal benefits in efficient markets. Consumer surplus is mathematically expressed as the integral of the difference between the WTP curve and the market price over the quantity consumed:

CS = \int_{0}^{Q} \left( WTP(q) - P \right) \, dq

where WTP(q) is the inverse demand function reflecting marginal willingness to pay at quantity q, and P is the equilibrium price up to the consumed quantity Q. This measure, originally conceptualized by Alfred Marshall as the excess of what consumers would pay over what they actually do, approximates CV or EV under small income elasticities and links directly to deadweight loss in market failures, such as monopolies or taxes, where deviations from competitive equilibrium reduce total surplus. For example, a tax-induced price wedge creates deadweight loss equal to the lost consumer (and producer) surplus, quantifiable via the area between the WTP and supply curves beyond the new equilibrium quantity. At the societal level, WTP aggregates into the social welfare function through the Kaldor-Hicks criterion, enabling analysis of potential Pareto efficiency without requiring actual compensation. Under this framework, a policy is deemed welfare-improving if the aggregate WTP of gainers (measured via CV) exceeds the willingness to accept (WTA) of losers, allowing hypothetical transfers to achieve Pareto optimality where no one is worse off and at least one is better off. This aggregation supports Pareto efficiency evaluations by maximizing total surplus in resource allocation, as in competitive equilibria where marginal WTP equals marginal cost, though it relies on interpersonal utility comparisons implicit in summing individual WTPs. Seminal contributions by Nicholas Kaldor and Hicks established this approach as a practical extension of strict Pareto criteria, facilitating cost-benefit analysis in public economics while acknowledging interpersonal distribution concerns.

Measurement Approaches

Stated Preference Methods

Stated preference methods elicit individuals' willingness to pay (WTP) through surveys that present hypothetical scenarios, allowing direct assessment of values for goods not traded in markets.^[21] These techniques are particularly valuable in economics for estimating preferences where observed market data is unavailable, such as for environmental amenities or public services.^[22] Contingent valuation (CV) is a primary stated preference approach in which respondents are asked to state their maximum WTP for a described good or service within a simulated market scenario. For instance, surveys might describe the preservation of a public park and query the amount a respondent would pay via higher taxes or fees to prevent its degradation.^[21] This method originated in the early 1970s, with Randall et al. (1974) providing one of the first applications through bidding games to value aesthetic improvements from reduced air pollution at a power plant site.^[23] CV gained prominence for environmental valuation, and its reliability was bolstered by the 1993 NOAA Panel guidelines, which recommended in-person interviews, dichotomous choice formats, and follow-up questions to minimize biases in legal and policy contexts.^[24] Choice experiments represent another key stated preference technique, where respondents evaluate and select among multiple hypothetical alternatives differing in attributes, including price, to infer underlying WTP.^[25] Participants might rank options for ecosystem management, such as varying levels of biodiversity protection at different costs, with preferences modeled using multinomial logit analysis to derive marginal WTP for each attribute.^[26] Developed in the 1980s and 1990s as an extension of conjoint analysis, choice experiments allow decomposition of value into specific components, offering flexibility for complex policy scenarios.^[27] These methods excel at valuing intangible or non-market goods, such as clean air or cultural heritage, where revealed preferences are infeasible due to lack of transactions.^[28] However, a major limitation is hypothetical bias, where stated WTP often exceeds actual payments, with a meta-analysis indicating a median overstatement by a factor of 1.35 in CV studies.^[28] This discrepancy arises from the absence of real budget constraints in surveys, though mitigation strategies like certainty scales can reduce the bias.^[29]

Revealed Preference Methods

Revealed preference methods infer willingness to pay (WTP) from observed consumer behaviors in actual markets, relying on choices made under real economic constraints rather than hypothetical scenarios. These approaches assume that individuals' decisions, such as purchases or travel, reflect their underlying valuations, providing a basis for estimating WTP without relying on self-reported data. By analyzing market data like prices, quantities, and expenditures, economists can derive implicit prices for goods or attributes that are not directly traded. This contrasts with stated preference methods, which use surveys to elicit valuations but may introduce biases from hypothetical contexts.^[30] Hedonic pricing is a key revealed preference technique that decomposes the observed prices of differentiated products into the implicit values of their underlying attributes, thereby estimating consumers' marginal WTP for specific characteristics. Developed by Sherwin Rosen in his seminal 1974 paper, the method models product prices as a function of measurable attributes, assuming that in equilibrium, the price gradient with respect to an attribute equals the marginal WTP for that attribute. For instance, in the housing market, hedonic models regress home sale prices on features such as location, size, and amenities to isolate the premium associated with school quality. A classic application by Sandra Black (1999) analyzed boundary discontinuities in school districts around Boston, finding that a one-standard-deviation increase in test scores correlates with a 2.5% to 5% rise in nearby house prices, reflecting parental WTP for better education. This approach has been widely used to value environmental amenities like air quality or noise levels bundled into real estate.^[31] The travel cost method estimates WTP for non-market goods, particularly recreational sites, by treating travel expenses as implicit entry prices and modeling visitation rates as a function of these costs. Pioneered by Marion Clawson and Jack L. Knetsch in their 1966 book Economics of Outdoor Recreation, the technique uses data on visitors' origins, distances traveled, and associated costs (including time valued at a fraction of wages) to construct a demand curve for site access. Visitors from farther away, facing higher travel costs, are assumed to have higher WTP, allowing estimation of consumer surplus as the area under this curve. For example, applications to national parks like Yellowstone have quantified annual recreational value in the hundreds of millions of dollars, informing resource allocation for conservation. The method typically employs zonal or individual models, with the former aggregating data by geographic zones and the latter using survey data from individual trips. Auction mechanisms, such as the Vickrey auction, reveal true WTP by incentivizing bidders to submit their maximum valuations in a sealed-bid, second-price format where the highest bidder wins but pays only the second-highest bid. Introduced by William Vickrey in his 1961 paper "Counterspeculation, Auctions, and Competitive Sealed Tenders," this design ensures it is a dominant strategy to bid one's true WTP, as shading bids offers no advantage and risks losing the item. In experimental and field settings, Vickrey auctions have been applied to value consumer goods, environmental attributes, or public projects, often eliciting valuations closer to true preferences than first-price auctions.^[32] This method is particularly useful for discrete goods where repeated market interactions are feasible. Despite their strengths, revealed preference methods face significant limitations, including assumptions of competitive markets free from distortions like externalities or information asymmetries, which may not hold in practice. Hedonic models, for example, require large, detailed datasets to control for confounding attributes and address endogeneity issues where attribute supply responds to demand. The travel cost method struggles with multi-site trips, where costs are not solely attributable to one destination, and with valuing non-use benefits like option or existence values. Auction approaches, while incentive-compatible in theory, can suffer from low participation or strategic behavior if bidders perceive risks, and they demand controlled environments that may not scale to broad policy applications. Overall, these methods often necessitate econometric adjustments and robust data to yield reliable WTP estimates.^[30]

Applications and Contexts

In Market Pricing and Auctions

In market pricing and auctions, willingness to pay (WTP) serves as a foundational metric for firms seeking to maximize revenue by aligning prices with consumer valuations. Price discrimination strategies exploit variations in WTP across consumer segments to capture a larger share of the economic surplus, where surplus represents the difference between a consumer's WTP and the price paid.^[33] In first-degree price discrimination, sellers achieve perfect segmentation by charging each buyer their exact WTP, often approximated through personalized pricing enabled by data on purchase histories or behaviors; this approach theoretically extracts the entire consumer surplus but requires substantial information about individual valuations.^[33] Third-degree discrimination, more commonly implemented, groups consumers by observable traits—such as age or location—and sets segment-specific prices to reflect average WTP within each group, as seen in varying ticket prices for students versus adults at events.^[33] Auction theory further integrates WTP as the core determinant of bidder behavior and seller outcomes, with bids reflecting private valuations under standard assumptions of independent private values.^[34] In second-price auctions, such as Vickrey auctions, the dominant strategy is for bidders to submit their true WTP, ensuring efficient allocation to the highest-valuing participant while the seller receives the second-highest bid as payment.^[34] The revenue equivalence theorem demonstrates that, under conditions of symmetry, risk neutrality, and independent private values, various auction formats—including first-price, second-price, and English auctions—yield the same expected revenue for the seller, equal to the expected value of the second-highest WTP among bidders.^[34] This equivalence underscores the robustness of WTP in driving market outcomes, allowing sellers to select formats based on simplicity or bidder participation rather than revenue potential. Dynamic pricing extends these principles by enabling real-time adjustments to prices based on estimated aggregate WTP, derived from data analytics on demand patterns and consumer signals. In the airline industry, revenue management systems forecast WTP fluctuations due to factors like booking timing or seasonality, optimizing seat prices to fill capacity while maximizing yield; for instance, fares rise as departure nears when remaining passengers exhibit higher urgency-driven WTP. Seminal models treat this as a multiproduct inventory problem, where prices are dynamically set to balance stochastic demand against limited supply over a finite horizon. A prominent case illustrating WTP's role in auctions is the eBay marketplace, where bidder valuations directly influence final sale prices through competitive bidding dynamics.^[35] In eBay's second-price format, sellers set reserve prices to screen out low-WTP bidders, thereby attracting higher-valuation entrants and elevating the second-highest bid, which determines the clearing price; empirical analysis of coin auctions shows that optimal reserves can increase seller revenue by filtering entry while preserving efficiency.^[35] This mechanism highlights how platforms leverage WTP to facilitate surplus extraction in decentralized markets.

In Public Policy and Valuation

In public policy, willingness to pay (WTP) serves as a critical tool in cost-benefit analysis (CBA) to monetize the benefits of non-market goods and services, enabling governments to evaluate the net welfare impacts of proposed regulations and projects. For instance, in assessing environmental regulations aimed at reducing air pollution, policymakers estimate WTP through surveys or revealed preference methods to quantify the value individuals place on health improvements and avoided damages, such as fewer respiratory illnesses. This approach aligns policy decisions with societal preferences, as seen in U.S. Environmental Protection Agency guidelines that incorporate WTP-derived values for cleaner air to justify compliance costs against projected benefits.^[36]^[37] In environmental economics, contingent valuation—a stated preference method—has been pivotal for valuing ecosystem services, particularly in legal and policy contexts involving non-use values like existence and bequest benefits. The 1989 Exxon Valdez oil spill exemplifies this application: a comprehensive contingent valuation study surveyed U.S. households to determine their WTP to prevent a similar incident, yielding a median household WTP of $30 and an aggregate passive-use loss estimated at $2.8 billion in 1990 dollars. This evidence supported a $1 billion settlement for natural resource damages and influenced U.S. Coast Guard oil spill prevention policies, marking the first judicial acceptance of contingent valuation for such valuations in a federal court case.^[38] WTP also informs health policy decisions, particularly in evaluating cost-effectiveness thresholds for drug approvals and resource allocation using quality-adjusted life years (QALYs). Regulatory bodies assess WTP per QALY gained to determine reimbursement, reflecting societal trade-offs between healthcare spending and other priorities; for example, thresholds around $50,000–$100,000 per QALY guide approvals by incorporating public preferences for health improvements. This method prioritizes treatments based on aggregated insurance pool preferences, though it emphasizes patient-specific ratings for QALY weights to better capture real-world experiences.^[39]^[40] Despite its utility, applying WTP in public policy raises equity challenges, as values are highly sensitive to income levels, potentially undervaluing benefits for lower-income groups and exacerbating distributional inequities. Studies show that income inequality reduces aggregate WTP for public environmental goods when such goods complement manufactured ones, with empirical adjustments indicating up to a 16% increase in WTP under more equal distributions for global biodiversity conservation. This variation prompts calls for equity weighting in CBA to ensure policies do not disproportionately burden or exclude marginalized populations.^[41]

Empirical and Experimental Insights

Laboratory Experiments

Laboratory experiments on willingness to pay (WTP) often employ induced valuation paradigms to elicit true valuations under controlled conditions. A seminal method is the Becker-DeGroot-Marschak (BDM) mechanism, which incentivizes truthful bidding by drawing a random price from a known distribution and awarding the good if the participant's bid exceeds the drawn price, while the participant pays the drawn price.^[42] This approach isolates WTP by making strategic misrepresentation non-beneficial, allowing researchers to test theoretical predictions without confounding market dynamics. In practice, BDM has been widely adopted in lab settings to measure valuations for consumer goods, environmental attributes, and public goods, revealing how WTP aligns with or deviates from rational expectations.^[43] Experimental designs in these studies emphasize real monetary incentives to minimize biases inherent in hypothetical scenarios, such as overstatement of valuations. Participants typically receive endowments or face actual payment obligations based on their choices, ensuring that decisions carry financial consequences and promote sincerity.^[44] For instance, in BDM implementations, payouts are determined by the interaction of bids and random draws, directly linking elicited WTP to economic outcomes. This incentivized structure contrasts with non-binding surveys and has been shown to yield more reliable estimates, as it aligns participant behavior with self-interest under controlled variables like information provision and task order.^[45] Behavioral insights from lab experiments highlight deviations from standard theory, particularly the endowment effect, where WTP for acquiring a good is systematically lower than willingness to accept (WTA) for relinquishing it. This gap, observed in controlled trades of mugs or candies, arises from loss aversion, a core element of prospect theory, where losses loom larger than equivalent gains.^[46] Kahneman, Knetsch, and Thaler demonstrated this persistence even after multiple market rounds, attributing it to reference dependence rather than income effects.^[47] Such findings underscore how ownership frames alter valuations, informing refinements to consumer theory in experimental contexts. Key results from incentivized labs indicate that hypothetical bias— the inflation of stated WTP without real stakes—is substantially reduced when payments are binding, with meta-analyses showing convergence between hypothetical and real responses in controlled environments.^[44] Additionally, WTP proves sensitive to framing effects, such as gain versus loss presentations, which can shift bids by 20-50% in BDM tasks without altering underlying utilities.^[48] These patterns hold across domains, emphasizing the role of context in valuation formation, though brief references to auction variants like Vickrey confirm similar incentive properties in lab tests of WTP.^[49]

Field and Survey Studies

Field and survey studies provide empirical evidence on willingness to pay (WTP) derived from real-world behaviors and large-scale data collection, offering insights into how individuals value goods and services outside controlled environments. Natural experiments exploiting policy-induced variations have been key to estimating WTP for environmental amenities, such as clean air, by observing changes in economic outcomes like housing markets. The 1970 Clean Air Act in the United States designated certain counties as nonattainment areas, leading to targeted pollution reductions that created exogenous shocks to air quality. Analyzing housing price differentials before and after implementation, Chay and Greenstone (2005) estimated the marginal WTP, capitalized in housing values, for a one standard deviation reduction in total suspended particulates (approximately 9 μg/m³) at approximately $3,514 per household in 1990 dollars, representing about 0.4% of average housing values in affected areas.^[50] In a similar vein, China's Huai River Policy, which subsidized coal heating north of the river and inadvertently increased pollution south of it, served as a natural experiment for air purifier demand. Ito and Zhang (2020) found that households were willing to pay $1.34 annually to reduce PM₁₀ by 1 μg/m³ and up to $32.70 annually to offset pollution from one cigarette smoked indoors, based on market data from differentiated air purifiers.^[51] These studies highlight how policy shocks reveal capitalized values in asset prices, providing robust, behaviorally grounded WTP measures. Large-scale surveys, aggregated through meta-analyses, reveal systematic variations in WTP across contexts and populations, underscoring the role of socioeconomic and cultural factors. A global meta-analysis of over 300 contingent valuation studies on ecosystem services estimated an average income elasticity of WTP at 0.6, meaning WTP increases with income but sub-proportionally, with notably higher absolute values in developed nations due to greater purchasing power.^[52] Such meta-analyses, drawing from thousands of respondents, demonstrate that WTP for public goods like biodiversity or clean water is consistently higher in high-income, urban settings but diminishes in regions with lower awareness or trust in institutions. Econometric models applied to survey responses allow for nuanced WTP estimation by isolating the effects of demographics and attitudes while accounting for survey design. In dichotomous choice formats—where respondents accept or reject a specific bid—probit or logit regressions model the probability of acceptance as a function of the bid amount, income, education, age, and environmental concern, yielding mean WTP as the integral of the utility function. Hanemann (1984) developed this parametric approach for contingent valuation, enabling welfare measures that control for heterogeneity; subsequent applications show positive coefficients for income (elasticity ~0.4-0.7) and education, with older respondents often exhibiting lower WTP for future-oriented goods like climate mitigation. For example, in surveys on organic food, regression models reveal that urban, higher-educated households pay 10-25% premiums, after adjusting for bid levels and regional fixed effects. These techniques enhance reliability by mitigating biases like starting-point dependence in open-ended questions. Recent developments as of 2025 leverage big data from mobile apps and e-commerce platforms to capture dynamic WTP, reflecting how preferences fluctuate with real-time factors like promotions or inventory. By analyzing vast datasets of user interactions—such as search queries, add-to-cart rates, and abandonment patterns—machine learning algorithms estimate WTP distributions without explicit surveys, often through structural models of demand. Cohen et al. (2023) applied this to subscription e-commerce data, inferring WTP from usage intensity and churn rates, finding that average monthly WTP for premium features varied by 20-30% based on recent engagement, enabling personalized pricing that boosts revenue by 5-15%.^[53] This approach reveals temporal dynamics absent in static surveys, such as heightened WTP during peak shopping seasons, and integrates seamlessly with A/B testing for causal inference in online markets. A 2025 systematic review highlights persistent disparities between willingness to accept (WTA) and WTP, with ratios ranging from 0.14 to 29.19 (median 1.61) in health-related valuations, underscoring behavioral gaps in empirical measures.^[54] Additionally, surveys of Generation Z indicate 69–82% willingness to pay premiums for green energy, such as 3.1% for home electricity and up to 10.5% for tree-planting initiatives.^[55]

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The Winner's Curse, Reserve Prices, and Endogenous Entry - jstor
Using the simulation method described in Bajari and Hortacsu (2000), we find that the implied value of c is $3.20, with a standard error of $1.48.
[38]
[PDF] A Primer for Understanding Benefit-Cost Analysis
The willingness to pay (as determined by the market price for the house, for instance) might be used instead. The use of WTP for both benefits and costs will.
[39]
[PDF] AN EXPERIMENT IN DETERMINING WILLINGNESS TO PAY FOR
and the gains associated with reduced pollution "benefits" (Freeman, 1979b). ... Cost Benefit Analysis and Water Pollution Policy (Washington, D.C.,. The ...
[40]
[PDF] Damages from the Exxon Valdez Oil Spill - UCSD Economics
A contingent valuation study was conducted to assess the harm from the Exxon Valdez oil spill, which released 11 million gallons of oil.
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How Should Willingness-to-Pay Values of Quality-Adjusted Life ...
Justification for using WTP values and QALYs lies in incorporating preferences of those whose treatment could be affected.
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Is The United States Ready For QALYs? - Health Affairs
Many health economists favor willingness-to-pay metrics that involve asking people directly what they would be willing to pay for health improvements.
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[PDF] Income inequality and willingness to pay for public environmental ...
Feb 29, 2016 · Abstract: We study how the distribution of income among members of society, and in- come inequality in particular, affects social willingness ...
[44]
Measuring utility by a single‐response sequential method - Becker
This paper reports an experiment to measure utility and to test one stochastic model of choice behavior. References.
[45]
A meta-analysis of willingness-to-pay using the Becker-DeGroot ...
Jul 10, 2023 · We utilised the Becker-DeGroot-Marschak (BDM) auction, an incentivised demand-revealing mechanism which quantifies SV through the economic metric of ...
[46]
Contingent Valuation, Hypothetical Bias, and Experimental Economics
Sep 15, 2016 · Ash, Michael Murphy, James J. and Stevens, Thomas 2004. Hypothetical Bias in Dichotomous Choice Contingent Valuation Studies. SSRN ...
[47]
[PDF] Multiple Price Lists for Willingness to Pay Elicitation
MPL can be used to carry out a variant of the Becker-deGroot-Marschak (BDM) mechanism, and many authors use the term BDM to refer to an MPL for WTP elicitation.
[48]
Experimental Tests of the Endowment Effect and the Coase Theorem
This paper reports several experiments that demonstrate that this "endowment effect" persists even in market settings with opportunities to learn.
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The Endowment Effect, Loss Aversion, and Status Quo Bias
This column documents the evidence supporting endowment effects and status quo biases, and discusses their relation to loss aversion.
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[PDF] Framing Influences Willingness to Pay but Not Willingness to Accept
Buyers' willingness to pay is influenced by the extent to which a risky prospect's frame is associated with risk (Experiment 1) as well as the prospect's ...
[51]
Auction mechanisms and the measurement of WTP and WTA
We test this thesis by evaluating the impact of three auction mechanisms in the measurement of willingness to pay (WTP) and willingness to accept (WTA) measures ...
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Does Air Quality Matter? Evidence from the Housing Market
Does Air Quality Matter? Evidence from the Housing Market. Kenneth Y. Chay and; Michael Greenstone.
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https://sics.haas.berkeley.edu/pdf_2023/paper_ck.pdf
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[PDF] Global evidence on the income elasticity of willingness to pay ...
Nov 18, 2024 · The study found an income elasticity of willingness to pay (WTP) of around 0.6 for ecosystem services, and a relative price change of around 1. ...<|control11|><|separator|>
[55]
The influence of national cultures on preferences and willingness to ...
This study provides the first comprehensive synthesis of consumers' preferences and willingness to pay for green electricity and examine the effect of cultural ...
[56]
[PDF] Estimating Willingness to Pay in Subscription Business Models
We demonstrate the conditions under which it is possible to obtain the distri- bution of consumer willingness to pay (WTP) for subscription products, where.