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5 2021 12:45 - 14:00
Aula seminari 3-e4sr03 (Roentgen 3rd floor)

Theory & Experiments Seminar Series

On Loss Aversion and On the Relation between Willingness to Accept and Willingness to Pay


Erik Snowberg, University of British Columbia, will present a combination of two papers:

"On Loss Aversion" and "On the Relation between Willingness to Accept and  Willingness to Pay"

Abstract Paper 2

 

 


A vast literature documents that willingness to pay (WTP) is less than willingness to accept (WTA) a monetary amount for an object, a phenomenon called the endowment effect. Using data from three incentivized studies with a total representative sample of 4,000 U.S. adults, we add one additional finding: WTA and WTP for a lottery are (essentially) uncorrelated. In contrast, independent measures of WTA (or WTP) are highly correlated, and relatively stable across time. Leading models of reference-dependent preferences are compatible with a zero correlation between WTA and WTP, but only for specific parameterizations and ruling out popular special cases. These models also predict a relationship between the endowment effect and loss aversion, which we do not find.

For further information please contact: erika.somma@unibocconi.it