@article{Schmidt2009experimental,
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.},
author = {Ulrich Schmidt and Stefan Traub},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
doi = {10.1007/s11238-007-9062-2},
isbn = {0040-5833},
journal = {Theory and decision},
keywords = {C91; D81; 330; WTA-WTP disparity; lotteries; background risk; contingent valuation},
language = {eng},
number = {3},
pages = {229-262},
title = {An experimental investigation of the disparity between WTA and WTP for lotteries},
url = {http://hdl.handle.net/10419/28786},
volume = {66},
year = {2009}
}
