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Title:Pricing risk and ambiguity: The effect of perspective taking PDF Logo
Authors:Trautmann, Stefan T.
Schmidt, Ulrich
Issue Date:2011
Series/Report no.:Kiel Working Papers 1727
Abstract:There is a large literature showing that willingness-to-accept (WTA) is usually much higher than willingness-to-pay (WTP) in empirical studies although they should be roughly equal according to traditional economic theory. A second stream of literature shows that people are typically ambiguity averse, i.e. they prefer lotteries with known probabilities over lotteries with unknown ones. Our study combines both streams of literature and analyzes whether there is an interaction between the WTP-WTA disparity and ambiguity aversion.
Subjects:WTP-WTA disparity
ambiguity aversion
comparative ignorance
JEL:C91
D81
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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