|Appears in Collections:||Economics Working Papers|
|Peer Review Status:||Refereed|
|Title:||Effects of Experience, Knowledge and Signals on Willingness to Pay for a Public Good|
|Citation:||LaRiviere J, Czajkowski M, Hanley N, Aanesen M, Falk-Peterson J & Tinch D (2014) Effects of Experience, Knowledge and Signals on Willingness to Pay for a Public Good. Stirling Economics Discussion Paper, 2014-04.|
|Series/Report no.:||Stirling Economics Discussion Paper, 2014-04|
|Abstract:||This paper compares how increases in experience versus increases in knowledge about a public good affect willingness to pay (WTP) for its provision. This is challenging because while consumers are often certain about their previous experiences with a good, they may be uncertain about the accuracy of their knowledge. We therefore design and conduct a field experiment in which treated subjects receive a precise and objective signal regarding their knowledge about a public good before estimating their WTP for it. Using data for two different public goods, we show qualitative equivalence of the effect of knowledge and experience on valuation for a public good. Surprisingly, though, we find that the causal effect of objective signals about the accuracy of a subject's knowledge for a public good can dramatically affect their valuation for it: treatment causes an increase of $150-$200 in WTP for well-informed individuals. We find no such effect for less informed subjects. Our results imply that WTP estimates for public goods are not only a function of true information states of the respondents but beliefs about those information states.|
|Type:||Working or Discussion Paper|
|Affiliation:||University of Tennessee|
University of Warsaw
University of Tromso
University of Tromso
|SEDP-2014-04-LaRiviere-Czajkowski-Hanley-Aanesen-FalkPeterson-Tinch.pdf||689.85 kB||Adobe PDF||View/Open|
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