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Game form misconceptions are not necessary for a willingness-to-pay vs. willingness-to-accept gap

Published online by Cambridge University Press:  01 January 2025

Björn Bartling ,
Florian Engl  and
Roberto A. Weber
Björn Bartling
Affiliation:
Department of Economics, University of Zurich, Blümlisalpstrasse 10, 8006 Zurich, Switzerland
Florian Engl
Affiliation:
Department of Economics, University of Zurich, Blümlisalpstrasse 10, 8006 Zurich, Switzerland
Roberto A. Weber*
Affiliation:
Department of Economics, University of Zurich, Blümlisalpstrasse 10, 8006 Zurich, Switzerland
*
e-mail: roberto.weber@econ.uzh.ch
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Abstract

Cason and Plott (J Polit Econ, 122(6):1235–1270, 2014) show that subjects’ misconception about the incentive properties of the Becker-DeGroot-Marschak (BDM) value elicitation procedure can generate data patterns that look like—and might thus be misinterpreted as evidence for—preferences constructed from endowments or reference points. We test whether game form misconceptions are necessary to produce willingness-to-pay (WTP) vs. willingness-to-accept (WTA) gaps in a valuation experiment in which subjects are randomly assigned to the role of either buyer or seller. We employ a design that allows us to identify whether a subject understood the incentive properties of a price-list version of the BDM mechanism. We find a robust WTP-WTA gap, even among subjects whose elicited valuations for a good of induced and known monetary value and whose ability to identify the payoffs resulting from their choices indicate an understanding of the incentive properties of the BDM mechanism. We conclude that game form misconceptions are not a necessary condition for the emergence of WTP-WTA gaps.

Keywords

WTP-WTA gapGame from misconceptionBDM mechanismEndowment effectExperimental methodsHighly replicable laboratory environment

JEL classification

C91: Laboratory, Individual Behavior
Type
Original Paper
Information
Journal of the Economic Science Association , Volume 1 , Issue 1 , July 2015 , pp. 72 - 85
Copyright
Copyright © Economic Science Association 2015

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Footnotes

Electronic supplementary material The online version of this article (doi:10.1007/s40881-015-0008-0) contains supplementary material, which is available to authorized users.

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