Does prompting for revision influence subjects' offers in willingness to accept - willingness to pay lab experiments?

Abstract

The willingness to accept - willingness to pay disparity raises questions about accepted economic theory. Plott and Zeiler (2005) have suggested that the disparity is the result of subject misconception about experimental procedures and, in an experiment designed to control for subject misconception, they show that the disparity can be turned on and off. This paper investigates a single feature of their experimental procedure - the prompt for subjects to consider revising their offers. Using the post-prompt and revision offers, we, like Plott and Zeiler, are unable to reject equality between WTA and WTP. However, using the pre-prompt and revision offers the disparity between WTP and WTA is shown to be significant. Results suggest that the prompt and revision opportunity systematically influences offers. Future research must determine whether the pre- or post-prompt offers more accurately reflect underlying preferences.

Citation

Kingsley, David C.; Brown, Thomas C. 2012. Does prompting for revision influence subjects' offers in willingness to accept - willingness to pay lab experiments? Economics Bulletin. 32(3): 2580-2585.