Information and the Divergence between Accept and Willingness to Pay

摘要

There is considerable empirical and experiemtal evidence that there is a divergence between willingness to accept compensation to give up a good and wilingness to pay to obtain a good. This divergence persists even when the good in question is small relative to income, a result in apparent confilict with costly information acqwuistion to explain this divergence. The model generates a gap between offers to sell and bids to buy consistent with the experimental resuluts. We argue that the model does a better job of explaining empirical and experimental data than either of the two commonly invoked theoretical explanations: the endowemtn effect and the substitution effect.