RT Journal Article
SR Electronic
T1 WTA-WTP Disparity: The Role of Perceived Realism of the Valuation Setting
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 196
OP 206
DO 10.3368/wple.97.1.030419-0033R1
VO 97
IS 1
A1 Manuel Frondel
A1 Stephan Sommer
A1 Lukas Tomberg
YR 2021
UL http://le.uwpress.org/content/97/1/196.abstract
AB Based on a survey of more than 5,000 German households and a single-binary-choice experiment in which we randomly split the respondents into two groups, this article explores both households’ willingness to pay (WTP) for power supply security and their willingness to accept (WTA) compensation for a reduced security level. In accordance with numerous empirical studies, we find that the mean WTA value substantially exceeds the mean WTP value in our empirical example by a factor of 3.56. Yet, the WTA-WTP ratio decreases to 2.35 if respondents believe that the hypothetical valuation setting is likely to become true.