The Effects of Selling Complements and Substitutes on Consumer Willingness to Pay: Evidence from a Laboratory Experiment

Abstract In a laboratory experiment, I examined two behavioural effects: hypothetical bias and the framing effect. I elicited willingness to pay (WTP) for a cosmetic product, and manipulated framing conditions (positive vs. negative attribute framing) and incentives to reveal the actual valuation (hypothetical vs. real). I demonstrated that hypothetical bias has a significant impact on WTP values; however, the framing effect has no effect on the valuation of the product. Similarly, I found no interaction between the two effects. This observation contributes to claims that hypothetical research methods lead to equally reliable data as those based on consequential choices.

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Pecunia non olet: on the self-selection into (dis)honest earning opportunities

Experimental Economics ◽

10.1007/s10683-020-09691-7 ◽

2021 ◽

Author(s):

Kai A. Konrad ◽

Tim Lohse ◽

Sven A. Simon

Keyword(s):

Willingness To Pay ◽

Laboratory Experiment ◽

The Self ◽

Decisive Factor ◽

Experimental Setup ◽

Self Selection

AbstractWe study self-selection into earning money in an honest or dishonest fashion based on individuals’ attitudes toward truthful reporting. We propose a decision-theoretic framework where individuals’ willingness to pay for honest earnings is determined by their (behavioral) lying costs. Our laboratory experiment identifies lying costs as the decisive factor causing self-selection into honest earning opportunities for individuals with high costs and into cheating opportunities for those prepared to misreport. Our experimental setup allows us to recover individual lying costs and their distribution in the population.

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Endowment Effects and Drinking Water Quality

Agricultural and Resource Economics Review ◽

10.1017/age.2016.23 ◽

2016 ◽

Vol 45 (2) ◽

pp. 338-366 ◽

Cited By ~ 1

Author(s):

Pamela L. Booth ◽

Todd Guilfoos ◽

Emi Uchida

Keyword(s):

Water Quality ◽

Drinking Water ◽

Willingness To Pay ◽

Laboratory Experiment ◽

Endowment Effect ◽

Drinking Water Quality ◽

Willingness To Accept ◽

Subject Design ◽

Quality Of Water

We conduct a laboratory experiment to test for the existence of the endowment effect—a gap between willingness to accept and willingness to pay—for improved drinking water quality using a within-subject design. We find a statistically significant and positive gap. Willingness to accept is 62 to 125 cents higher than willingness to pay on average, indicating the presence of endowment effects. This gap is robust to information about the quality of water being consumed. We also identify some heterogeneity in the size of the gaps that is associated with differences in subjects' knowledge of drinking water quality and disparities in their incomes.

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Old World and New World Sparkling Wines: Consumer Decisions and Insights for Retailers

Cornell Hospitality Quarterly ◽

10.1177/1938965520978168 ◽

2020 ◽

pp. 193896552097816

Author(s):

Aaron Adalja ◽

Florine Livat ◽

Bradley Rickard ◽

Alex Susskind

Keyword(s):

United States ◽

Willingness To Pay ◽

Laboratory Experiment ◽

New World ◽

Consumer Demand ◽

Food Service ◽

The United States ◽

Old World ◽

Consumer Decisions ◽

Consumption Frequency

The objective of this research is to examine consumer demand for sparkling wines. We developed a laboratory experiment to collect data on consumers’ willingness to pay (WTP) for selected wines from France, Spain, and the United States (Finger Lakes) under different information treatments. Our results suggest that expenditures and consumption frequency for all wines are most important to WTP and notably that familiarity with sparkling wines was relatively important for the “local” U.S. wine among the consumers in our sample. We discuss the important implications of our findings for managers of small U.S. wineries building their reputations and for restaurants and other food service outlets interested in attracting a broader consumer base.

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Subjective Time Preference and Willingness to Pay for an Energy-Saving Durable Good

Zeitschrift für Sozialpsychologie ◽

10.1024//0044-3514.32.3.133 ◽

2001 ◽

Vol 32 (3) ◽

pp. 133-141 ◽

Cited By ~ 4

Author(s):

Gerrit Antonides ◽

Sophia R. Wunderink

Keyword(s):

Willingness To Pay ◽

Energy Saving ◽

Subjective Time ◽

Durable Good ◽

Discount Function ◽

Hyperbolic Discount ◽

The One ◽

Two Parameter ◽

Difference Effect ◽

Better Than

Summary: Different shapes of individual subjective discount functions were compared using real measures of willingness to accept future monetary outcomes in an experiment. The two-parameter hyperbolic discount function described the data better than three alternative one-parameter discount functions. However, the hyperbolic discount functions did not explain the common difference effect better than the classical discount function. Discount functions were also estimated from survey data of Dutch households who reported their willingness to postpone positive and negative amounts. Future positive amounts were discounted more than future negative amounts and smaller amounts were discounted more than larger amounts. Furthermore, younger people discounted more than older people. Finally, discount functions were used in explaining consumers' willingness to pay for an energy-saving durable good. In this case, the two-parameter discount model could not be estimated and the one-parameter models did not differ significantly in explaining the data.

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