The Effect of Power Outages and Cheap Talk on Willingness to Pay to Reduce Outages

Fredrik Carlsson (), Peter Martinsson and Alpaslan Akay ()

No 4307, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: Using an open-ended contingent valuation survey, we analyze how (i) experience of a power outage due to one of the worst storms ever to hit Sweden and (ii) a cheap talk script affect respondents' WTP to avoid power outages. Experience significantly increases and a cheap talk script decreases the proportion of respondents with zero WTP. There is no significant effect in either case on stated WTP conditional on a positive WTP. The paper concludes with a discussion on the use of valuation studies shortly after the occurrence of an undesirable event.

Keywords: contingent valuation; cheap talk; experience; power outages (search for similar items in EconPapers)
JEL-codes: C25 D12 Q41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-mic
Date: 2009-07
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