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According to the constructed preference view, consumer willingness to pay is a context-sensitive construct; that is, a consumer's WTP for a product depends on the concrete decision context. For example, consumers tend to be willing to pay more for a soft drink in a luxury hotel resort in comparison to a beach bar or a local retail store.
On conducting the benefit-cost analysis, the team measured each dollar value of an environmental benefit by estimating a how many dollars a person is willing to pay in order to decrease or eliminate a current threat to their health, otherwise known as their "willingness-to-pay" (WTP). The WTP of the U.S. population was estimated and summed for ...
Then the willingness to accept is defined by (+,) = (,). [3] That is, the willingness to accept payment in order to put up with the adverse change equates the pre-change utility (on the right side) with the post-change utility, including compensation. In contrast, the willingness to pay is defined by
The Becker–DeGroot–Marschak method (BDM), named after Gordon M. Becker, Morris H. DeGroot and Jacob Marschak for the 1964 Behavioral Science paper, "Measuring Utility by a Single-Response Sequential Method" is an incentive-compatible procedure used in experimental economics to measure willingness to pay (WTP).
Many economists question the use of stated preference to determine willingness to pay for a good, preferring to rely on people's revealed preferences in binding market transactions. Early contingent valuation surveys were often open-ended questions of the form "how much compensation would you demand for the destruction of X area" or "how much ...
They go on to suggest that the endowment effect, when considered as a facet of loss-aversion, would thus violate the Coase theorem, and was described as inconsistent with standard economic theory which asserts that a person's willingness to pay (WTP) for a good should be equal to their willingness to accept (WTA) compensation to be deprived of ...
The HuffPost/Chronicle analysis found that subsidization rates tend to be highest at colleges where ticket sales and other revenue is the lowest — meaning that students who have the least interest in their college’s sports teams are often required to pay the most to support them.
The value that a consumer gives to a good or service, can then be defined as their willingness to pay for it (in monetary terms) or the amount of time and resources they would be willing to give up for it. [2] For example, a painting may be priced at a higher cost than the price of a canvas and paints. If set using the value-based approach, its ...