Willingness-to-Pay, Compensating Variation, and the Cost of Commitment
| dc.creator | Zhao, Jinhua | |
| dc.creator | Kling, Catherine L. | |
| dc.date | 2017-04-01T14:02:00Z | |
| dc.date.accessioned | 2026-07-09T03:24:00Z | |
| dc.description | We present a dynamic model of an agent's decision to purchase or sell a good under conditions of uncertainty, irreversibility, and learning over time. Her WTP contains both the intrinsic value of the good and a commitment cost associated with delaying the decision until more information is available. Consequently, the standard Hicksian equivalence between WTP/WTA and compensating and equivalent variation no longer holds. This finding has important practical implications as it implies that observed WTP values are not always appropriate for welfare analysis. | |
| dc.identifier | doi:10.22004/ag.econ.18357 | |
| dc.identifier | https://ageconsearch.umn.edu/record/18357/files/wp000251.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/18357 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/531890 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/18357 | |
| dc.title | Willingness-to-Pay, Compensating Variation, and the Cost of Commitment | |
| dc.type | Text |