Eliciting and Utilizing Willingness to Pay: Evidence from Field Trials in Northern Ghana

James Berry, Greg Fischer and Raymond Guiteras

No 10703, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We demonstrate the benefits and feasibility of using the Becker-DeGroot-Marschak (BDM) mechanism to elicit precise, individual-level willingness to pay and thereby enhance the information generated by randomized experiments. With a relatively small sample and minor modifications to a standard field experiment design, we can directly estimate demand, study the effect of prices on usage through screening and psychological (sunk-cost) effects, and compute heterogeneous marginal treatment effects. Applying the mechanism to a field experiment studying clean drinking water technology in northern Ghana, we show that even in an environment with low literacy and numeracy, BDM produces sensible results. We find that although willingness to pay for clean water technology is low relative to the cost, demand is surprisingly inelastic at low prices; prices do not generate significant sunk-cost effects; and treatment effects are heterogeneous with respect to valuation and consistent with outcomes being affected by effort expenditure.

Keywords: Field experiments; Health behavior; Heterogeneous treatment effects; Price mechanism (search for similar items in EconPapers)
JEL-codes: C26 C93 D12 L11 L31 O12 Q51 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-dcm, nep-env and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58)

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Related works:
Working Paper: Eliciting and utilizing willingness to pay: evidence from field trials in northern Ghana (2020)
Working Paper: Eliciting and Utilizing Willingness-to-Pay: Evidence from Field Trials in Northern Ghana (2018)
Working Paper: Eliciting and Utilizing Willingness-to-pay: Evidence from Field Trials in Northern Ghana (2018)
Working Paper: Eliciting and utilizing willingness to pay: evidence from field trials in Northern Ghana (2012)
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