Estimating willingness to pay by risk adjustment mechanism

Joo Heon Park and Douglas L. MacLachlan

Applied Economics, 2013, vol. 45, issue 1, 37-46

Abstract: Measuring consumers’ Willingness To Pay (WTP) without considering the level of uncertainty in valuation and the consequent risk premiums will result in estimates that are biased toward lower values. This research proposes a model and method for correctly assessing WTP in cases involving valuation uncertainty. The new method, called Risk Adjustment Mechanism (RAM), is presented theoretically and demonstrated empirically. It is shown that the RAM outperforms the traditional method for assessing WTP, especially in a context of a nonmarket good such as a totally new product.

Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2011.568404 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:45:y:2013:i:1:p:37-46

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2011.568404

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().