Skip to main content

Estimating willingness to pay by risk adjustment mechanism

Buy Article:

$55.00 plus tax (Refund Policy)

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.

Keywords: D12; D81; M31; adjustment mechanism; contigent valuation method; purchase decisions; willingness to pay

Document Type: Research Article

DOI: https://doi.org/10.1080/00036846.2011.568404

Affiliations: 1: Department of Economics,Dongduk Women's University, 23-1 Wolgok-dongSungbuk-GuSeoul 136-714, Korea 2: Michael G. Foster School of Business, University of Washington, SeattleWA 98195-3226, USA

Publication date: 2013-01-01

More about this publication?
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content
Cookie Policy
X
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more