Measuring the Willingness to Pay to Avoid Guilt: Estimation using Equilibrium and Stated Belief Models
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Measuring the Willingness to Pay to Avoid Guilt : Estimation using Equilibrium and Stated Belief Models. / Bellemare, Charles; Sebald, Alexander Christopher; Strobel, Martin.
Department of Economics, University of Copenhagen, 2010.Research output: Working paper › Research
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TY - UNPB
T1 - Measuring the Willingness to Pay to Avoid Guilt
T2 - Estimation using Equilibrium and Stated Belief Models
AU - Bellemare, Charles
AU - Sebald, Alexander Christopher
AU - Strobel, Martin
N1 - JEL classification: C93, D63, D84
PY - 2010
Y1 - 2010
N2 - We estimate structural models of guilt aversion to measure the population level of willingness to pay (WTP) to avoid feeling guilt by letting down another player. We compare estimates of WTP under the assumption that higher-order beliefs are in equilibrium (i.e. consistent with the choice distribution) with models estimated using stated beliefs which relax the equilibrium requirement. We estimate WTP in the later case by allowing stated beliefs to be correlated with guilt aversion, thus controlling for a possible source of a consensus effect. All models are estimated using data from an experiment of proposal and response conducted with a large and representative sample of the Dutch population. Our range of estimates suggests that responders are willing to pay between 0.40 and 0.80 Euro to avoid letting down proposers by 1 Euro. Furthermore, we find that WTP estimated using stated beliefs is substantially overestimated (by a factor of two) when correlation between preferences and beliefs is not controlled for. Finally, we find no evidence that WTP is significantly related to the observable socio-economic characteristics of players.
AB - We estimate structural models of guilt aversion to measure the population level of willingness to pay (WTP) to avoid feeling guilt by letting down another player. We compare estimates of WTP under the assumption that higher-order beliefs are in equilibrium (i.e. consistent with the choice distribution) with models estimated using stated beliefs which relax the equilibrium requirement. We estimate WTP in the later case by allowing stated beliefs to be correlated with guilt aversion, thus controlling for a possible source of a consensus effect. All models are estimated using data from an experiment of proposal and response conducted with a large and representative sample of the Dutch population. Our range of estimates suggests that responders are willing to pay between 0.40 and 0.80 Euro to avoid letting down proposers by 1 Euro. Furthermore, we find that WTP estimated using stated beliefs is substantially overestimated (by a factor of two) when correlation between preferences and beliefs is not controlled for. Finally, we find no evidence that WTP is significantly related to the observable socio-economic characteristics of players.
KW - Faculty of Social Sciences
KW - guilt aversion
KW - willingness to pay
M3 - Working paper
BT - Measuring the Willingness to Pay to Avoid Guilt
PB - Department of Economics, University of Copenhagen
ER -
ID: 18314924