Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/48811 
Authors: 
Year of Publication: 
2009
Series/Report no.: 
CSERGE Working Paper EDM No. 09-06
Publisher: 
University of East Anglia, The Centre for Social and Economic Research on the Global Environment (CSERGE), Norwich
Abstract: 
Several experimental studies have reported that an otherwise robust regularity - the disparity between Willingness-To-Accept and Willingness-To-Pay - tends to be greatly reduced in repeated markets, posing a serious challenge to existing reference-dependent and reference-independent models alike. This paper offers a new account of the evidence, based on the assumptions that individuals are affected by good and bad deals relative to the expected transaction price (price sensitivity), with bad deals having a larger impact on their utility ('bad-deal'aversion). These features of preferences explain the existing evidence better than alternative approaches, including the most recent developments of loss aversion models.
Subjects: 
WTA/WTP disparity
price sensitivity
bad-deal aversion
reference-dependence
loss aversion
Document Type: 
Working Paper

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