Measuring the willingness-to-pay for others' consumption: an application to joint decisions of children

Sabrina Bruyneel, Laurens Cherchye, Sam Cosaert, Bram De Rock and Siegfried Dewitte

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: We propose a method to quantify the willingness-to-pay for the consumption of others in group decisions. Our method is based on revealed preference theory. It measures willingness-to-pay for others' consumption by evaluating positive consumption externalities in monetary terms. Within the framework of cooperative (i.e. Pareto efficient) consumption behavior, we introduce a selfishness parameter that defines a continuum of models that are characterized by varying degrees of consumption externalities. We use our method to analyze decisions made by dyads of children in an experimental consumption setting. We find that children's consumption decisions are systematically characterized by externalities (i.e. non-selfish). But we also observe that there is substantial heterogeneity across children, which we can relate to differences in age, gender and degree of friendship between dyad members.

Date: 2014-07
New Economics Papers: this item is included in nep-cbe, nep-dcm and nep-exp
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://lirias.kuleuven.be/bitstream/123456789/460053/3/DPS1422.pdf

Related works:
Journal Article: Measuring the willingness‐to‐pay for others' consumption: An application to joint decisions of children (2017)
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:ete:ceswps:ces14.22

Access Statistics for this paper

More papers in Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven
Bibliographic data for series maintained by library EBIB ().