Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 497: The Willingness to Pay-Willingness to Accept Gap Revisited: The Role of Emotions and Moral Satisfaction
Anders Biel, Olof Johansson-Stenman () and Andreas Nilsson
Additional contact information
Anders Biel: Department of Psychology, Postal: Göteborg University, Box 640, SE 40530 GÖTEBORG
Olof Johansson-Stenman: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG
Andreas Nilsson: Department of Psychology, Postal: Göteborg University, Box 640, SE 40530 GÖTEBORG
Abstract: While many earlier studies have found that people’s maximum willingness to pay for having a good is often substantially lower than their minimum willingness to accept not having it, more recent experimental evidence suggests that this discrepancy vanishes for standard consumption goods when an incentive-compatible design without misconceptions is used. This paper hypothesises that there is nevertheless a discrepancy for goods with a perceived moral character, such as contributions to a good cause, and moreover that the reason for this discrepancy can largely be explained by differences in emotions and moral perceptions. The results from a real-money dichotomous-choice experiment, combined with measurements of emotions and morality, are consistent with these hypotheses.
Keywords: Willingness to pay-Willingness to accept gap; Endowment effect; Emotions; Ethics; Experiments
26 pages, April 28, 2011
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