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2008_04_22_Notes

2008_04_22_Notes - UP FRONT Reminder problem set 5 due...

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UP FRONT, 4-22-08 Reminder: problem set 5 due Thursday. I have office hour after class here, John has office hour tomorrow 12-2 in Warren 211. Reading for Thursday: pp. 435-441. Outline for Today 1) Contingent valuation, part 2.
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Key Issues 1. Willingness to pay v. willingness to accept “Willingness to pay (WTP):” The maximum amount a person is willing to pay for a good. “Willingness to accept (WTA):” The least a person would accept to agree to give up a good. WTA is often larger than WTP
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(Horowitz, J.K. and K.E. McConnell, 2002. JEEM , 44:426-447.)
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An Experimental Examination of Intrinsic Values as a Source of the WTA-WTP Disparity (R.R. Boyce, T.C. Brown, G.H. McClelland, G.L. Peterson, W.D. Schulze, AER , 82(5):1366-1373.
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Diet Coke experiment Mean WTP: Mean WTA:
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The Endowment Effect (Attributed to Kahneman, Tversky and Thaler, amongst others) Mugs q
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Valuation of Valdez Oil Spill: Key Issues 1. WTP v. WTA Prince William Sound and other affected areas are held in trust for present and future generations. Since the public holds right to services, one measure is the minimum amount of money the American people as a whole would voluntarily agree to accept to experience the loss or disruption of services. The WTA is the correct measure in this case. Unfortunately, hypothetical WTA is difficult to measure as
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2008_04_22_Notes - UP FRONT Reminder problem set 5 due...

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