The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Goods

Mikolaj Czajkowski, Nick Hanley and Jacob LaRiviere

No 2012-15, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: This paper develops a model of demand estimation in which consumers learn about their true preferences through consumption experiences. We develop a theoretical model of Bayesian updating, perform comparative statics over the model, and show how the theoretical model can be consistently incorporated into a reduced form econometric model. We then estimate the model using data collected for two quasi-public goods. We find that the predictions of the theoretical exercise that additional experience with a good will make consumers more certain over their preferences in both mean and variance are supported in each case.

Keywords: The; support; of; the; Polish; Ministry; of; Science; and; Higher; Education; and; the; Foundation; for; Polish; Science; is; gratefully; acknowledged. (search for similar items in EconPapers)
JEL-codes: C51 D83 H43 Q51 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2012
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http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP81.pdf First version, 2012 (application/pdf)

Related works:
Working Paper: The Effects of Experience on Preference Uncertainty: Theory and Empirics for Public and Quasi-Public Goods (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2012-15

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