Pricing risk and ambiguity: The effect of perspective taking

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 1727

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Criteria for Decision-Making under Risk and Uncertainty
• Subject: WTP-WTA disparity ; ambiguity aversion ; comparative ignorance ; Willingness to pay ; Entscheidung bei Unsicherheit ; Risikoaversion ; Prospect Theory ; Test

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Trautmann, Stefan T. ; Schmidt, Ulrich
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/49380
• Last update: 10.03.2025, 11:41 AM CET