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Contingent valuation surveys were first proposed in theory by S.V. Ciriacy-Wantrup (1947) as a method for eliciting market valuation of a non-market good.The first practical application of the technique was in 1963 when Robert K. Davis used surveys to estimate the value hunters and tourists placed on a particular wilderness area.
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).
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.
Contingent valuation is a common method in identifying how consumers value various things like healthcare, safety and the environment. The WTA and WTP are very common methods for contingent valuation, where subjects are asked exactly how much money they would be willing to accept in order to receive one less unit of the goods or conversely how ...
The embedding effect is an issue in environmental economics and other branches of economics where researchers wish to identify the value of a specific public good using a contingent valuation or willingness-to-pay (WTP) approach. The problem arises because public goods belong to society as a whole, and are generally not traded in the market.
An example of mental accounting is people's willingness to pay more for goods when using credit cards than if they are paying with cash. [1] This phenomenon is referred to as payment decoupling. Mental accounting (or psychological accounting ) is a model of consumer behaviour developed by Richard Thaler that attempts to describe the process ...
In a valuation paradigm, people's maximum willingness to pay (WTP) to acquire an object is typically lower than the least amount they are willing to accept (WTA) to give up that same object when they own it—even when there is no cause for attachment, or even if the item was only obtained minutes ago. [4]
Subjects were told that either 2,000, or 20,000, or 200,000 migrating birds were affected annually, for which subjects reported they were willing to pay $80, $78 and $88 respectively. [2] Other studies of willingness-to-pay to prevent harm have found a logarithmic relationship or no relationship to scope size.