Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value

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ID: 297347
1984
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Abstract
Aside from possible income effects, measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent. Unexpectedly wide variations between these sums, however, have been noted in survey responses to hypothetical options. This paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations. The results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure, which would appear to call into some question various rules of entitlement, damage assessments, and interpretations of indifference curves.
Reference Key
openalex_W2106752002 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Jack L. Knetsch, Jack A. Sinden
Journal the quarterly journal of economics
Year 1984
DOI
10.2307/1885962
URL
https://doi.org/10.2307/1885962
Keywords Keywords not found

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