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WTP–WTA disparity among competitive and non-competitive subjects – an experimental study

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  • Tal Shavit
  • Shosh Shahrabani
  • Uri Benzion

Abstract

Recent studies have questioned the existence and interpretation of a possible gap between Willingness-To-Pay (WTP) and Willingness-To-Accept (WTA). The study analyses the bidding patterns in buying and selling lottery tickets that represent financial assets using second price auction, and then tests for the existence of the WTP and WTA gap. It is shown that for lotteries, this gap is not significant for the group of all subjects, but that it may exist for a sub-group of subjects. Subjects were classified according to their degree of competitiveness and a negative gap was found for non-competitive subjects and a positive gap for competitive subjects. These gaps offset each other when the group of all the subjects was used.

Suggested Citation

  • Tal Shavit & Shosh Shahrabani & Uri Benzion, 2006. "WTP–WTA disparity among competitive and non-competitive subjects – an experimental study," Applied Financial Economics Letters, Taylor & Francis Journals, vol. 2(5), pages 333-336.
    • Handle: RePEc:taf:raflxx:v:2:y:2006:i:5:p:333-336
    DOI: 10.1080/17446540600592787
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