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American Economic Review: Vol. 101 No. 2 (April 2011)

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The Willingness to Pay—Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations: Reply

Article Citation

Plott, Charles R., and Kathryn Zeiler. 2011. "The Willingness to Pay—Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations: Reply." American Economic Review, 101(2): 1012-28.

DOI: 10.1257/aer.101.2.1012

Abstract

Isoni, Loomes, and Sugden (2011) assert that Plott and Zeiler (2005) reported inaccurate results. Placing ILS's selective quotes into context demonstrates otherwise. Additionally, examining the data closely yields three conclusions. First, all mug data reject endowment effect theory. Second, lottery gaps are associated with unstable attitudes toward uncertainty, a finding consistent with PZ's (2005) lottery data description, explicit warnings about procedure limitations and the data supplement, which reports the lottery data and cautions. Third, lottery outcome beliefs are influenced by whether WTP or WTA is reported, suggesting that changing beliefs, as opposed to the shape of preferences, produce lottery gaps. (JEL C91)

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Download Data Set (675.45 KB) | Online Appendix (192.06 KB)

Authors

Plott, Charles R. (CA Institute of Technology)
Zeiler, Kathryn (Georgetown U Law Center)

JEL Classifications

C91: Design of Experiments: Laboratory, Individual


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