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Determinants of the magnitude of willingness to accept relative to willingness to pay
Author(s) -
Shefrin Hersh,
Caldwell David
Publication year - 2001
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/bdm.367
Subject(s) - willingness to accept , willingness to pay , econometrics , event (particle physics) , economics , test (biology) , statistics , social psychology , mathematics , psychology , microeconomics , physics , quantum mechanics , paleontology , biology
In this paper we test two hypotheses that stem from the work of Mellers, Chang, Birnbaum and Ordonez (1992). The first hypothesis is that in a binary gamble, the ratio of WTA to WTP is decreasing in the probability attached to a nonzero event. The second hypothesis is that this ratio is independent of the size of stakes. We find support for the first hypothesis, but mixed support for the second. The second hypothesis holds in the case of gains, but not in the case of losses. Copyright © 2001 John Wiley & Sons, Ltd.