The willingness to pay–willingness to accept gap: A failed replication of Plott and Zeiler

• Published in: European economic review Vol. 78; pp. 120 - 128
• Main Authors: Fehr, Dietmar, Hakimov, Rustamdjan, Kübler, Dorothea
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01.08.2015; Elsevier Sequoia S.A
• Subjects: BDM mechanism; Decision making; Endowment effect; Misconceptions; Replication; Studies; Willingness to pay; WTP–WTA gap; BDM mechanism; Misconceptions; D03; Endowment effect; Replication; C91; WTP–WTA gap
• ISSN: 0014-2921; 1873-572X
• DOI: 10.1016/j.euroecorev.2015.05.006

The well-known willingness to pay–willingness to accept (WTP–WTA) gap refers to the observation that individuals attach a higher value to objects they own (WTA) than to objects they do not own (WTP). We report on experiments to re-investigate the possibility that the WTP–WTA gap arises from subject misconceptions due to experimental procedures as suggested by Plott and Zeiler (2005). The contribution of this paper is two-fold: first, we attempt to replicate the findings by Plott and Zeiler that the WTP–WTA gap disappears when using procedures that are aimed at reducing misconceptions, such as extensive training and practice rounds for the BDM mechanism. However, we fail to do so as the WTP–WTA gap persists in the main task where subjects state their WTA or WTP for a mug. Second, we use the paid practice rounds to identify subjects without apparent misconceptions and find that also for those subjects who never make dominated choices in the lottery tasks, the WTP–WTA gap in the mug task exists. Thus, we find no evidence of the idea that subject misconceptions are the main source of the WTP–WTA gap.