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Resolving Differences in Willingness to Pay and Willingness to Accept: Reply

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  • Shogren, Jason F.
  • Hayes, Dermot J.

Abstract

Gwendolyn C. Morrison (1997) raises a logical point regarding our experimental test of the divergence between willingness to pay (WTP) and willingness to accept (WTA) measures of economic value (Shogren et al., 1994). She argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map (Daniel Kahneman et al., 1990). She concludes that even though our ev- idence shows that the mean WTP and WTA bids for market goods with close substitutes (e.g., candy bars and coffee mugs) converge after market experience, the endowment effect might still be alive and well, albeit at statisti- cally insignificant levels

Suggested Citation

  • Shogren, Jason F. & Hayes, Dermot J., 1997. "Resolving Differences in Willingness to Pay and Willingness to Accept: Reply," ISU General Staff Papers 199703010800001006, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:199703010800001006
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    1. Morrison, Gwendolyn C, 1997. "Resolving Differences in Willingness to Pay and Willingness to Accept: Comment," American Economic Review, American Economic Association, vol. 87(1), pages 236-240, March.
    2. Shogren, Jason F. & Cho, Sungwon & Koo, Cannon & List, John & Park, Changwon & Polo, Pablo & Wilhelmi, Robert, 2001. "Auction mechanisms and the measurement of WTP and WTA," Resource and Energy Economics, Elsevier, vol. 23(2), pages 97-109, April.
    3. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    4. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    5. Shogren, Jason F. & Seung Y. Shin & Dermot J. Hayes & James B. Kliebenstein, 1994. "Resolving Differences in Willingness to Pay and Willingness to Accept," American Economic Review, American Economic Association, vol. 84(1), pages 255-270, March.
    6. Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
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