@techreport{Traub2006Experimental,
abstract = {In this paper we experimentally investigate the disparity between willingness-to-accept (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.},
address = {Kiel},
author = {Stefan Traub and Ulrich Schmidt},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {C91; D81; 330; WTA-WTP disparity; lotteries; background risk; contingent valuation; Willingness to pay; Gl\"{u}cksspiel; Experiment; Theorie},
language = {eng},
number = {2006,09},
publisher = {Christian-Albrechts-Universit\"{a}t Kiel, Department of Economics},
title = {An Experimental Investigation of the Disparity between WTA and WTP for Lotteries},
type = {Economics working paper / Christian-Albrechts-Universit\"{a}t Kiel, Department of Economics},
url = {http://hdl.handle.net/10419/22014},
year = {2006}
}
