altruistic egoistic and biospheric values in willingness to pay wtp for wildlife abstract we attempt to measure general attitudes and ethical beliefs towards preservation as well as the importance of each of the three considered value orientations biospheric egoistic and altruistic in wtp estimates in the present study we apply the gac scale to a contingent valuation exercise for the recovery of the common murre uria aalge in galicia spain up to now only a few studies in the field of environmental and ecological economics have analyzed value orientations under the environmental concern ec framework obtaining mixed results in the present work we conclude that ethical aspects affect the individuals decision making process and that value orientations play an important role in the pro environmental attitude formation these value orientations affect willingness to pay wtp estimates for environmental goods

understanding heterogeneous preferences in random utility models a latent class approach a finite mixture approach toconditional logit models is developed in whichlatent classes are used to promoteunderstanding of systematic heterogeneity the model is applied to wilderness recreationin which a branded choice experiment involvingchoice of one park from a demand system wasadministered to a sample of recreationists the basis of membership in the classes orsegments in the sample involved attitudinalmeasures of motivations for taking a trip aswell as their stated preferences overwilderness park attributes the econometricanalysis suggested that four classes of peopleexist in the sample using the model toexamine welfare measures of some hypotheticalpolicy changes identified markedly differentwelfare effects than the standard singlesegment model and provided insight into thedifferential impact of alternative policies

winners losers and the nuclear waste dilemma this paper explores how property right assignment affects social efficiency when a public program has both public good and public bad components we show that when willingness to accept a public bad exceeds the willingness to pay the net benefit is unambiguously lower when the property right supports the status quo institutional structure thus kaldor hicks efficiency tests tend to favor public programs and mitigation over the status quo even when mitigation negatively affects another group to illustrate the result we develop social cost estimates for moving nuclear waste from current temporary storage facilities to a permanent central repository at yucca mountain nv usa for a representative city with a population of 226 195 the present value of the external cost of shipping waste is 1 42 billion when those living near temporary nuclear waste storage facilities are assigned the property right to health and safety that number swells to 5 95 billion when those living near the transport route are assigned the property right thus property right assignment affects the efficient level of nuclear waste and thus nuclear energy produced

a review of wta wtp studies abstract willingness to accept wta is usually substantially higher than willingness to pay wtp these constructs have been studied for roughly 30 years and with a wide variety of goods this paper reviews those studies we find that the less the good is like an ordinary market good the higher is the ratio the ratio is highest for non market goods next highest for ordinary private goods and lowest for experiments involving forms of money a generalization of this pattern holds even when we account for differences in survey design ordinary goods have lower ratios than non ordinary ones we also find that ratios in real experiments are not significantly different from hypothetical experiments and that incentive compatible elicitation yields higher ratios

war of attrition evidence from a laboratory experiment on market exit i introduction young industries often undergo a process of shakeout gort and klepper 1982 and klepper 1996 attracting excess firms and gradually shedding them over time more mature industries are likewise often forced to contract in the face of recession or product specific negative demand shocks when an overcrowded industry is forced to shrink which firms exit and which ones survive the conventional answer in economics is that overcrowded industries tend to shed inefficient firms and retain efficient ones we might call this survival of the most efficient a process analogous to natural selection that can adaptively improve the efficiency of industries over time nelson and winter 1982 fudenberg and tirole 1986 model firms exit decisions in overcrowded duopoly markets as wars of attrition and show that the intuition of survival of the most efficient has merit even if firms have little information regarding their costs relative to their competitors however the equilibrium of their game is complex involving a solution to a system of differential equations since neither fortune 500 chief executive officers in the naturally occurring markets nor undergraduate participants in laboratory markets deliberately solve differential equations when deciding whether or not to exit a declining market it is an open question as to how well fudenberg and tirole s rational reconstruction of the exit decision corresponds to the facts of how people make such decisions we report the results of a laboratory experiment designed to answer this question nearly 200 subjects in 16 sessions participated in a total of 3 800 wars of attrition based on fudenberg and tirole s model at the beginning of each period subjects were randomly paired and given a private cost draw that usually induced negative net per second payoffs in a shared market and positive net payoffs per second in monopoly subjects then decided in real time whether and when to exit the market never to return monotonic equilibrium strategy functions predict higher cost inefficient participant exit at an earlier time than their lower cost competitor that is the relatively efficient competitor survives in the market we find that fudenberg and tirole s model organizes our data surprisingly well especially considering its complexity we observe exit by the higher cost firm in 76 of cases when differences between the costs faced by firms are substantial the rate of efficient exit rises to nearly 100 the data on exit times are likewise quite close to the point predictions particularly in the crucial higher portion of the cost distribution that generally governs exit times the median deviation from equilibrium exit times falls to zero by the end and on average subjects earn payouts identical to those predicted in equilibrium our design permits tests of two other conjectures in fudenberg and tirole first our data supports fudenberg and tirole s core comparative static prediction that a decrease in the ex ante likelihood of actually being in a war of attrition leads to an increase in the speed of exit 1 second half of our sessions use costs framed as fixed costs suffered while in the market and half use costs framed as opportunity costs earned by exiting the market there is no evidence that this treatment variable affects exit behavior this isomorphism between gains and losses predicted by standard theory stands in stark contrast to evidence from previous individual decision making experiments suggesting asymmetries in how people react to potential losses and potential gains although wars of attrition have an important place in the game theoretic literature there are surprisingly few experimental studies directly relating to them 2 3 bilodeau childs and mestelman 2004 study a three player full information war of attrition framed as a volunteer game and report widespread failure of equilibrium predictions the predicted volunteer in a subgame perfect nash equilibrium only volunteers 41 of the time

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

modeling individual preferences for energy sources the case of iv generation nuclear energy in italy the planned re introduction of nuclear energy in italy was abandoned in the aftermath of the fukushima nuclear accident twenty years earlier soon after the chernobyl accident italians had also voted against nuclear energy however a new nuclear energy technology i e fourth generation is under research and development this paper investigates its social acceptance by means of a robust methodology employing 1 choice experiments 2 structural equation modeling and 3 information treatments within an online nation wide survey results show a great deal of preference heterogeneity the majority of the sampled respondents oppose new nuclear plants in italy with some not willing to accept any monetary compensation at all however another segment of respondents more confident that fourth generation nuclear energy goals will be achieved show a modest support towards the implementation of new nuclear projects additional variables were found to affect opposition

protest responses and willingness to pay attitude toward paying for stormwater pollution abatement abstract in contingent valuation cv surveys there is often a proportion of individuals who are not willing to pay to obtain avoid an increase decrease in some attribute of a particular environmental public good some of these respondents might protest an aspect of the cv survey e g payment vehicle or the behavioral intention i e willingness to pay wtp constituting the measure of economic value respondents attitudes toward the behavior of paying for a particular public good may contribute to the decision to pay independent of other explanatory variables such as the price of the intervention household income and methodological characteristics of the cv survey moreover attitude toward paying for the good may manifest in protest responses as a reaction to higher prices and methodological factors e g the payment vehicle to the extent that protest beliefs are dependent on such matters of survey design they may be alleviated through changes in cv methodology however to the extent that protest beliefs are a reaction to the act of paying methodological remedies may not be effective cv surveys of stormwater pollution abatement were conducted in four australian state capital cities the surveys differed with respect to the type of pollution abatement intervention the payment regime the vector of prices used in the dichotomous choice question and the institution responsible for implementing the stormwater pollution intervention protest beliefs were measured for all respondents irrespective of their responses to the wtp question results indicated that attitude toward paying underpinned protest beliefs regarding the role of government in stormwater management and individual rights to unpolluted waterways this attitude was present in each city sample despite methodological differences between the cv surveys attitude toward paying explained variability in wtp and was a larger predictor than was price household income was significantly associated with attitude toward paying and this relationship was also invariant over city samples protest beliefs were not independent of either the wtp question or demographic factors such as household income rather these beliefs were related to wtp through attitudes toward the act of paying for stormwater pollution abatement censoring protest responses in the present study would bias cv samples toward those individuals who are favorably disposed toward paying for environmental public goods and those from higher income households

ordering effects and choice set awareness in repeat response stated preference studies we present an experiment designed to investigate the presence and nature of ordering effects within repeat response stated preference sp studies our experiment takes the form of a large sample full factorial discrete choice sp exercise investigating preferences for tap water quality improvements our study simultaneously investigates a variety of different forms of position dependent and precedent dependent ordering effect in preferences for attributes and options and in response randomness we also examine whether advanced disclosure of the choice tasks impacts on the probability of exhibiting ordering effects of those different types we analyze our data both non parametrically and parametrically and find robust evidence for ordering effects we also find that the patterns of order effect in respondents preferences are significantly changed but not eradicated by the advanced disclosure of choice tasks a finding that offers insights into the choice behaviors underpinning order effects

a target group specific approach to green power retailing students as consumers of renewable energy an extensive body of literature exists on the obstacles that have to be overcome in green power retailing in this article target group specific marketing is evaluated as a strategy to increase the share of residential customers of green power a sample of students in the city of freiburg germany was interviewed in order to assess their awareness of environmental issues their willingness to change to green power products and to better understand individual hindrances in changing the power supplier the analysis shows that students are highly positive towards green power products but for several reasons difficult to reach in marketing campaigns aspects to be considered in addressing this consumer group include the students particular expectations towards green products their living conditions price sensitivity and their perception of the relative effort involved in changing the power provider

ageing and unused capacity in europe is there an early retirement trap we address the issue of how early retirement may interact with limited use of financial markets in producing financial hardship later in life when some risks such as long term care are not insured we argue that the presence of financially attractive early retirement schemes in a world of imperfect financial and insurance markets can lead to an early retirement trap indeed europe witnesses many early retired individuals in financial distress in our analysis we use data on 10 european countries which differ in their pension and welfare systems in prevailing retirement age and in households access to financial markets we find evidence that an early retirement trap exists particularly in some southern and central european countries people who retired early in life are more likely to be in financial hardship in the long run our analysis implies that governments should stop making early retirement attractive let retirees go back to work improve access to financial markets and make sure long term care problems are adequately insured viola angelini agar brugiavini and guglielmo weber

measuring the energy security implications of fossil fuel resource concentration abstract economic assessments of the welfare effects of energy insecurity are typically uncertain and fail to provide clear guidance to policy makers as a result governments have had little analytical support to complement expert judgment in the assessment of energy security this is likely to be inadequate when considering multiple policy goals and in particular the intersections between energy security and climate change mitigation policies this paper presents an alternative approach which focuses on gauging the causes of energy insecurity as a way to assist policy making the paper focuses on the energy security implications of fossil fuel resource concentration and distinguishes between the price and physical availability components of energy insecurity it defines two separate indexes the energy security price index espi based on the measure of market concentration in competitive fossil fuel markets and the energy security physical availability index espai based on the measure of supply flexibility in regulated markets the paper illustrates the application of espi and espai with two case studies france and the united kingdom looking at the evolution of both indexes to 2030

assessing the validity and reliability of contingent values a comparison of on site users off site users and non users abstract imperfect information in contingent markets can affect the validity and reliability of contingent values willingness to pay wtp for changes in natural resource allocations survey respondents can acquire information about the natural resource to be valued from behavior such as on site use of the resource off site use of the resource and or from the survey itself in this paper we compare the validity and reliability of wtp from respondents who obtained information in these different ways using theoretical validity tests based on relative prices as well as income we find that wtp is valid for respondents with information from on site and or off site use willingness to pay is less valid for respondents who had no information about the natural resource before they participated in the survey using an alternative form reliability test we find that wtp is in the technical sense reliable for all respondents and somewhat more reliable for on site users

individual option prices for climate change mitigation abstract willingness to pay for climate change mitigation depends on people s perceptions about just how bad things will get if nothing is done individual subjective distributions for future climate conditions are combined with stated choices over alternative climate policies to estimate individual option prices the appropriate ex ante welfare measure in the face of uncertainty for climate change mitigation we find statistically significant sensitivity of estimated option prices to both expected future conditions and uncertainty about future conditions

pension wealth and household saving evidence from pension reforms in the united kingdom using three major u k pension reforms as natural experiments we investigate the relationship between pension saving and discretionary private savings unlike most differences in differences approaches which rely on average differences between control and treatment group we use economic theory to model the response of each individual household the empirical analysis based on the family expenditure survey uses both time series and cross sectional variation to identify the behavioral response the earnings related tier of the pension scheme is found to have a negative impact on private savings with relatively high substitution elasticities the impact of the flat rate tier is not significantly different from zero jel h55 h91 the relationship between pension wealth and household savings is crucial for important policy issues such as establishing the effects of changes in pension legislation on saving behavior from a theoretical point of view the lifecycle framework suggests that the provision of public benefits after retirement constitutes a negative incentive to accumulate wealth during one s working life quantifying the resulting relationship between pension wealth and saving even within a simple theoretical frame

on the causal dynamics between emissions nuclear energy renewable energy and economic growth this paper examines the causal relationship between co2 emissions nuclear energy consumption renewable energy consumption and economic growth for a group of 19 developed and developing countries for the period 1984 2007 using a panel error correction model the long run estimates indicate that there is a statistically significant negative association between nuclear energy consumption and emissions but a statistically significant positive relationship between emissions and renewable energy consumption the results from the panel granger causality tests suggest that in the short run nuclear energy consumption plays an important role in reducing co2 emissions whereas renewable energy consumption does not contribute to reductions in emissions this may be due to the lack of adequate storage technology to overcome intermittent supply problems as a result electricity producers have to rely on emission generating energy sources to meet peak load demand

evaluating the public perceptions of nuclear power in china evidence from a contingent valuation survey national natural science foundation of china 71303199 71373218 ministry of education foundation of china 13yjc790123 11jbgp006 13jzd010 fundamental research funds for the central universities 201122g008 2014221001 national social science foundation of china 13zd167

a test of the theory of reference dependent preferences eight alternative methods of eliciting preferences between money and a consumption good are identified two of these are standard willingness to accept and willingness to pay measures these methods differ with respect to the reference point used and the dimension in which responses are expressed the loss aversion hypothesis of tversky and kahneman s theory of reference dependent preferences predicts systematic differences between the preferences elicited by these methods these predictions are tested by eliciting individuals preferences for two private consumption goods the experimental design is incentive compatible and controls for income and substitution effects the theory s predictions are broadly confirmed

leadership by example in the weak link game we investigate the effects of leadership in a four player weak link game a weak link game is a coordination game with multiple pareto ranked nash equilibria because the more efficient equilibria involve a degree of strategic uncertainty groups typically find it difficult to coordinate on more efficient equilibria we wanted to see whether leadership by example in the form of one player acting publicly before the rest of the group could help groups do better our results suggest that leadership can increase efficiency but is far from being a guarantee of success specifically in a significant number of groups we observed successful leadership and increased efficiency but in most groups efficiency was low despite the efforts of leaders we did not find any difference between voluntary leaders and leaders that are randomly assigned

disentangling retirement and savings responses in january 2006 the dutch government implemented a pension reform that substantially reduced the public pension wealth of workers born in 1950 or later at the same time a tax facilitated savings plan was introduced that implied a large savings subsidy for all workers irrespective of birth year this paper uses linked administrative and survey data to assess the effect of the reform on the savings and retirement expectations and realizations of two virtually identical male cohorts that differ only in treatment status the treated having been born in 1950 and the controls having been born in 1949 we show that retirement expectations are in line with realizations and that the reform increased the labor supply for the larger part of the workers namely those without sufficient means to substantially increase private savings to counter the effect of the reform these workers have zero substitution rates between private and public wealth on the other hand there is a group of mostly high wage workers who participate in the tax facilitated savings plan and increase their private savings to fully counter the impact of the drop in public wealth an unintended side effect of the introduction of the tax facilitated savings plan is that high wage earners who are not affected by the drop in pension wealth retire even sooner than initially planned

noxious facilities environmental damages and efficient randomized siting this paper considers the efficient siting of a noxious facility that causes environmental damages for example increased pollution in the host community the analysis shows that there can be multiple efficient locations without transfers and that an efficient location need not have the smallest wta or wtp in general there exist randomized outcomes that are ex ante efficient and that pareto dominate efficient outcomes the analysis also shows that a community s most preferred lottery never provides full insurance under some conditions lotteries with no host compensation are pareto superior to those with compensation

willingness to accept willingness to pay and the income effect abstract the gap between willingness to pay wtp and willingness to accept wta has previously been studied by searching for evidence of substitutability the neoclassical hypothesis or status quo bias testing for neoclassical versus psychological theories of preferences we study the gap differently asking whether the observed pairs of wta and wtp are consistent with neoclassical preferences we use sugden s alternatives to the neoclassical theory of choice in i bateman k g willis eds valuing environmental preferences theory and practice of the contingent valuation method in the us eu and developing countries oxford university press oxford pp 152 180 chapter 6 result showing that the effect of income on wtp can be approximated from information on the ratio wta wtp drawing inferences from a meta analysis of 201 wta wtp ratios we conclude that the data are not consistent with neoclassical preferences

public support for reducing us reliance on fossil fuels investigating household willingness to pay for energy research and development abstract in order to reduce future dependence on foreign oil and emissions of co2 how much would us households be willing to pay annually to support increased energy research and development r d activities designed to replace fossil fuels does it matter whether the r d includes nuclear energy options we explore these questions using data from a unique set of national telephone and internet surveys using a national advisory referendum format the contingent valuation method is applied to estimate annual household willingness to pay wtp for us household support of a national energy research and development fund erdf for investments in energy sources not reliant on fossil fuels while accounting for the level of un certainty in voting responses the wtp modeling includes a comparison of both classic maximum likelihood estimation mle and bayesian analysis evidence indicates that mle and bayesian analysis achieve similar statistical inference while the bayesian analysis provides a narrower confidence interval around estimated wtp

the relevance of attitudinal factors for the acceptance of energy policy measures a micro econometric analysis abstract this paper empirically examines the individual support of the german energy transition in total and especially of six single energy policy measures which are components of the energy transition our micro econometric analysis with binary and ordered probit models on the basis of data from a broad survey of citizens reveals the important role of several attitudinal factors with respect to our indicators for perceived personal costs of the energy transition the estimation results point to a weak evidence for economic self interest due to some negative correlations between expected energy price increases due to the energy transition and the support of single energy policy measures interestingly however the concern that the energy transition alone causes strong energy price increases is not shared by the majority of the respondents the estimation results also suggest that the support of several energy policy measures is strongly correlated with environmental values however the most important attitudinal factor is obviously political identification the econometric analysis suggests that an overall left green policy identification is positively correlated with the support of the energy transition in total and an identification with ecological policy is positively correlated with the acceptance of several single energy policy measures the econometric analysis especially supports the more sophisticated categorization of political orientation since for example a liberal conservative policy orientation is not significantly correlated with the support of the energy transition in total

savings in times of demographic change lessons from the german experience pension reforms in many developed countries make individuals shoulder a bigger share of longevity and income risks the desired response is that individuals accumulate private assets for retirement whether this actually takes place is of paramount relevance for scientists and policy makers we take germany as an example twenty years of pension reform have transformed the monolithic german pension system into a multi pillar system formerly generous public pension benefits are gradually being reduced while substantial incentives are granted to occupational and private saving schemes has this transition worked out we survey the reform steps and household s reactions how did individuals adjust their labor market behavior how did private and occupational pension plans take off how do behavioral adjustments vary in the population most germans adapted to the new situation both actual and expected retirement decisions changedand the share of households without supplementary pensions decreased from 73 to 39 in little more than a decade this is a remarkable success nonetheless households with low education low income and less financial education did neither adjust their retirement behavior nor pick up supplementary pension plans and are thus likely to face difficulties in bridging the gap arising in future pension income

an evolutionary interpretation of van huyck battalio and beil s experimental results on coordination this paper proposes an adaptive interpretation of the results of some recent experiments with repeated tacit coordination games these experiments revealed several behavioral regularities including a systematic discrimination between strict nash equilibria in certain games that appear to be driven by strategic uncertainty and are not explained by traditional equilibrium refinements the observed patterns of discrimination correspond closely to predictions based on maynard smith s notion of evolutionary stability an adaptive model in the spirit of the evolutionary dynamics but recognizing the important differences between learning in human populations and evolution promises to yield a unified explanation of the results journal of economic literature classification numbers 020 026

nimby or not exploring the relevance of location and the politics of voiced opinions in renewable energy siting controversies local protests against renewable energy facilities have added fuel to the debate about the so called nimby not in my back yard effect this paper identifies six variables that can hamper the comparison between different public perception studies and offers two broad conclusions on aggregate proximity does have strong influence on public attitudes to proposed projects but the nature strength and spatial scale of this effect may vary according to local context and value of the land residents of stigmatised places are more likely to welcome facilities that are relatively green while people who derive a more positive sense of identity from particular rural landscapes are likely to resist such potential developments especially if they also live there secondly the fear of being branded a nimby and the positive ethics associated with the notion of renewable are both likely to colour the responses of many interviewees these aspects need to be clarified and accounted for in analyses of elicited responses both quantitative and qualitative if we are to improve our understanding of the social construction of individual attitudes in siting conflicts

coordination and learning behavior in large groups with asymmetric players we study a class of large group noncooperative iterated market entry games with complete information binary choices and asymmetric players in which the incentive of each player to enter the market decreases the larger the number of entrants experimental results from two different studies show remarkable coordination on the aggregate level which is accounted for successfully by the nash equilibrium solution the equilibrium solution is less successful in accounting for the differences among types of players with differential entry costs or differences among players of the same type rather the behavioral patterns observed on the aggregate level are accounted for by a reinforcement based learning model postulating an initial distribution of individual cutoff points these cutoff points are assumed to change over time at a decreasing rate as a joint function of the decision and outcome of the preceding period journal of economic literature classification numbers c7 d5 d8 2002 elsevier science usa

valuation of environmental and societal trade offs of renewable energy sources abstract use of renewable energy sources is one solution to decrease green house gas emissions and the use of polluting fossil fuels renewables differ in their environmental and societal impacts and to design sound renewable energy policy societies need to assess the trade offs between alternative sources to enable the evaluation and comparison of renewable energy production alternatives in finland this paper applies the choice experiment to elicit the monetary information on people s preferences for four renewable energy sources wind power hydro power and energy from crops and wood and considers four impacts of energy production effects on biodiversity local jobs carbon emissions and household s electricity bill the nested logit analysis reveals that higher income male gender young age and pro environmental attitude increase the probability to choose renewable energy instead of the current energy mix wind power is on average the most popular renewable energy technology but regional differences exist biodiversity deterioration should be avoided the national aggregate willingness to pay based on stated preferences rather than preferences revealed by actual market behavior for a combination of renewable energy technologies that corresponds to finland s climate change and energy policy is over 500 million euros

inducing patterns of correlation and substitution in repeated logit models of recreation demand repeated logit models are among the most commonly applied methods for modeling seasonal recreation demand in this article we examine the capabilities of the repeated nested logit and repeated mixed logit models to capture patterns of error correlation and demand substitution particular attention is paid to the use of the mixed logit framework to generalize the strong assumptions on correlation patterns across sites and choice occasions imbedded in the nested logit model we examine the implications for the range of price elasticities allowed in both models based on the implied correlation structures copyright 2002 oxford university press

consumers willingness to pay for renewable and nuclear energy a comparative analysis between the us and japan abstract this paper examines consumers willingness to pay for nuclear and renewable electricity as two alternatives to fossil fuels for the reduction of greenhouse gas emissions we conduct a choice experiment of consumer stated preferences on the basis of an online survey in four us states and japan after the fukushima nuclear plant accident first the results suggest that us consumers willingness to pay for a 1 decrease in greenhouse gas emissions is 0 31 per month which is similar to the results for the us a decade ago japanese consumers show a slightly lower willingness to pay of 0 26 per month second the average consumer in both countries expresses a negative preference for increases in nuclear power in the fuel mix to a greater extent in japan third renewable energy sources were endorsed by both us and japanese consumers who show a willingness to pay 0 71 and 0 31 per month for a 1 increase in the use of renewable source energy this study also examines the differences in respondents characteristics approximately 60 of the us respondents who did not change their perception concerning the use of nuclear energy subsequent to the fukushima nuclear crisis have almost no preference for variation in nuclear power which is in stark contrast to the japanese respondents opposition to nuclear energy

substitutability experience and the value disparity evidence from the marketplace abstract recent empirical evidence suggests that important disparities exist between willingness to pay and compensation demanded for the same good these results which clearly contradict closely held economic doctrines have led some influential commentators to call for an entirely new economic paradigm to displace conventional neoclassical theory this study examines the generality of these experimental findings by going to a well functioning marketplace and examining more than 350 individual decisions across two incentive compatible elicitation mechanisms the data suggest that behavior of individuals with intense experience approaches neoclassical predictions any observed wta wtp disparity amongst this group is negligible

willingness to pay for agricultural land preservation and policy process attributes does the method matter this article examines relationships between willingness to pay for land preservation and policy process attributes the approach departs from traditional welfare assessments in that it does not constrain attributes of the policy process to be utility neutral results indicate policy process attributes may influence utility in some circumstances even after controlling for the influence of land use outcomes often correlated with specific policy techniques results further imply that in some cases even comprehensive specification of land use outcomes by stated preference instruments may be insufficient to prevent systematic shifts in willingness to pay related to unspecified yet assumed policy process attributes

pension wealth and household savings tests of robustness abstract a substantial literature exists on the impact of pension schemes both public and private on the level of household saving yet there is no clear consensus on the impact of pensions on private saving in this paper we show how beliefs about this displacement effect are modified by prior beliefs both about variables which might be relevant in an equation for private savings and about the magnitude of the displacement effect using data for 8279 canadian households and estimates of pension wealth both private and social security which we construct for each household in the sample the estimated displacement effects are found to be relatively robust with respect to both types of prior belief

trade credit and the propagation of corporate failure an empirical analysis using an exhaustive data set on claims held by trade creditors suppliers on failed trade debtors customers we quantify the importance of trade credit chains for the propagation of corporate bankruptcy we show that trade creditors experience significant trade credit losses due to trade debtor failures and that creditors bankruptcy risks increase in the size of incurred losses by exploring the roles of financial constraints and creditor debtor dependences we infer that the trade credit failure propagation mechanism is driven by both credit losses and demand shrinkage finally we show that the documented propagation mechanism constitutes a significant part of the overall bankruptcy frequency suggesting that it has measurable implications for the aggregate level

choosing between internet and mail survey modes for choice experiment surveys considering non market goods in a choice experiment setup considering a non market good this paper adds to the literature on survey mode effects by providing evidence that internet surveys can be a viable alternative to traditional mail surveys when gathering feedback from a sample of respondents the case study concerns preferences for protecting different types of landscape from road encroachment when building new motorways in denmark two samples of respondents are surveyed one by internet and one by mail the performances of the two samples are compared over six different criteria response rates protest responses demographics preferences and wtp estimation precision and finally certainty in choice differences are observed for some of these criteria implying that analysts should be aware that choosing internet over mail could be accompanied by a survey mode effect however the observed differences do not translate into significant differences in the unconditional wtp estimates in most applied economic valuation studies of non market goods the main objective is in fact estimation of wtp hence in the present case the identified survey mode effects do not severely invalidate the applicability and continued use of the internet as a suitable means of collecting data for choice experiment economic valuation of non market goods

explaining the wealth holdings of different cohorts productivity growth and social security in this paper we explore the reasons why different generations accumulate different amounts of wealth we use basic economic theory to propose two indicators of the economic conditions under which households accumulate wealth the first one represents productivity differences across cohorts the aggregate level of gross national product per capita around the time the head of the household entered the labor market the second measure summarizes the changes in social security during the head of household s working life using panel data from the dutch socio economic panel we show that productivity growth can explain all the cohort effects present in income data while productivity growth and the generosity of social security can explain all the cohort effects present in household net worth we also find a limited offset of social security on wealth holdings

do protest responses to a contingent valuation question and a choice experiment differ it is suggested that the number of protest responses in stated preference surveys depends inter alia on the valuation method used choice experiments ce are said to generate a lower number of protest responses than contingent valuation cv however no comparison of both methods with respect to protest responses has been conducted to date we used both ce and cv in a survey on forest biodiversity in two german regions protest beliefs were measured for all respondents irrespective of whether they were willing to pay or not the results show no clear pattern of differences between ce and cv regarding protest beliefs and protest responses using an attitude scale based on respondents protest beliefs we see a significant negative effect of this attitude on willingness to pay in both methods however in one of the two study regions the effect is weaker in ce than in cv

what do customers want from improved residential electricity services evidence from a choice experiment abstract improvements in customer satisfaction as well as product service quality represent a common objective of all businesses and electricity services are no exception using choice experiments and a mixed logit model this study quantitatively analyzes customers preferences and their marginal willingness to pay for improved residential electricity services the study provides an ex ante evaluation of customers acceptance of hypothetical electricity services according to the results customers consider the electricity bill and the electricity mix as the two most important attributes when choosing their electricity services customers are willing to pay 2 2 more in the average electricity bill an additional monthly electricity bill of krw 1 064 usd 0 96 for a significant increase in the share of renewable energy which is far less than the actual cost of achieving this renewable target therefore it is better to maintain the current electricity mix in principle and the renewable share should be gradually expanded instead of making a sudden change in the electricity mix in addition customers are willing to pay krw 6 793 usd 6 15 more to reduce blackouts once in a year and krw 64 year usd 0 06 year to reduce a minute of each blackout

a new explanation for the wtp wta disparity abstract we propose a new explanation for the wtp wta disparity in experiments and surveys uncertainty irreversibility and limited learning opportunities can generate commitment costs driving a wedge between wtp and wta we present experimental evidence that supports our hypothesis

learning information and sorting in market entry games theory and evidence previous data from experiments on market entry games n player games where each player faces a choice between entering a market and staying out appear inconsistent with either mixed or pure nash equilibria here we show that in this class of game learning theory predicts sorting that is in the long run agents play a pure strategy equilibrium with some agents permanently in the market and some permanently out we conduct experiments with a larger number of repetitions than in previous work in order to test this prediction we find that when subjects are given minimal information only after close to 100 periods do subjects begin to approach equilibrium in contrast with full information subjects learn to play a pure strategy equilibrium relatively quickly however the information which permits rapid convergence revelation of the individual play of all opponents

viewscapes and flood hazard coastal housing market response to amenities and risk coastal amenities and risk are so highly correlated that separate identification within the hedonic framework is potentially challenging in this study we construct a three dimensional measure of ocean view viewscape accounting for natural topography and built obstruction that varies independent of risk classification to disentangle these spatially integrated housing characteristics a spatial autoregressive hedonic model is developed to provide consistent estimates of the willingness to pay for coastal amenities and risk our findings suggest that incorporating the gis based view measures can be successful in isolating risk factors from spatial amenities

measuring the social value of nuclear energy using contingent valuation methodology abstract as one of the promising energy sources for the next few decades nuclear energy receives more attention than before as environmental issues become more important and the supply of fossil fuels becomes unstable one of the reasons for this attention is based on the rapid innovation of nuclear technology which solves many of its technological constraints and safety issues however regardless of these rapid innovations social acceptance for nuclear energy has been relatively low and unchanged consequently the social perception has often been an obstacle to the development and execution of nuclear policy requiring enormous subsidies which are not based on the social value of nuclear energy therefore in this study we estimate the social value of nuclear energy consumers willingness to pay for nuclear energy using the contingent valuation method cvm and suggest that the social value of nuclear energy increases approximately 68 5 with the provision of adequate information about nuclear energy to the public consequently we suggest that the social acceptance management in nuclear policy development is important along with nuclear technology innovation

choice modelling approaches a superior alternative for environmental valuation in this paper we examine some popular choice modelling approaches to environmental valuation which can be considered as alternatives to more familiar valuation techniques based on stated preferences such as the contingent valuation method a number of choice modelling methods are consistent with consumer theory and its focus on an attribute based theory of value permits a superior representation of many environmental management contexts however choice modelling surveys can place a severe cognitive burden upon respondents and induce satisficing rather than maximising behavioural patterns in this framework we seek to identify the best available choice modelling alternative and investigate its potential to solve some of the major biases associated with standard contingent valuation we then discuss its use in the light of policy appraisal needs within the eu an application to the demand for rock climbing in scotland is provided as an illustration

compensating for public harms why public goods are preferred to money this paper provides evidence that public goods represent a more acceptable response to public harms than monetary compensation we demonstrate a preference for public goods over monetary compensation in part because receipt of public goods may limit the sense of guilt or bribery from accepting compensation for the injury more surprising this preference for public goods over money in the presence of a harm remains in a free market choice where guilt is not an issue it appears that public goods psychologically mitigate or balance public harms in a way that makes them more valuable in the presence of public harms

modeling the psychology of consumer and firm behavior with behavioral economics abstract marketing is an applied science that tries to explain and influence how firms and consumers behave in markets marketing models are usually applications of standard economic theories which rely on strong assumptions of rationality of consumers and firms behavioral economics explores the implications of the limits of rationality with the goal of making economic theories more plausible by explaining and predicting behavior more accurately while maintaining formal power this article reviews six behavioral economics models that are useful to marketing three models generalize standard preference structures to allow for sensitivity to reference points and loss aversion social preferences toward outcomes of others and preference for instant gratification the other three models generalize the concept of game theoretic equilibrium allowing decision makers to make mistakes encounter limits on the depth of strategic thinking and equilibrate by learning from feedback the authors also discuss a sp

determinants of demand for green products an application to eco label demand for fish in europe abstract in this paper we confront the theoretical motivations of the consumption of eco friendly products and the factors influencing the european perceptions regarding the fact that fish caught using an environmentally friendly technique may carry a special label we take advantage of the recent integration of non economic elements in the microeconomic analysis of consumers behavior in order to highlight the factors leading to their demand for green products thanks to an original european survey on seafood product carried out on more than 5000 consumers we test the influence of intrinsic motivation information localization and socio economic factors on the demand for an eco label for fish our results show a significant connection between the desire for eco labeling and seafood features especially the freshness of the fish the geographical origin of the fish and the wild vs farmed origin of the fish moreover we prove the major role played by the fish price we also demonstrate that the ecological issue regarding fisheries is highly connected to consumer information intrinsic motivation and socio economic status the typical green fish consumer is a young woman well educated well informed on the state of marine resources and not very trusting of the regulation of the fisheries consumers who are aware of the importance of marine resource preservation have the same profile

pensions and household wealth accumulation abstract economists have long suggested that higher private pension benefits crowd out other sources of household wealth accumulation we exploit detailed information on pensions and lifetime earnings for older workers in the 1992 wave of the health and retirement study and employ an instrumental variable iv identification strategy to estimate crowd out the iv estimates suggest statistically significant crowd out each dollar of pension wealth is associated with a 53 67 cent decline in nonpension wealth with less precision we use an instrumental variable quantile regression estimator and find that most of the effect is concentrated in the upper quantiles of the wealth distribution

testing willingness to pay models of discrete choice contingent valuation survey data this paper considers models of willingness to pay wtp based on dichotomous choice contingent valuation survey data and examines the effect of the survey design on tests of goodness of fit simulations show that eliciting single binary responses result in tests that have low power in detecting departures from the maintained distribution of wtp unless the sample size is truly large the power of the tests improves if a follow up question and a moderate number of sets of bid values are used and if the bids are not placed on the extreme tails of the wtp distribution

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

expert information and majority decisions this paper shows theoretically and experimentally that hearing expert opinions can be a double edged sword for collective decision making we present a majoritarian voting game of common interest where committee members receive not only private information but also expert information that is more accurate than private information and observed by all members in theory there are bayesian nash equilibria where the committee members voting strategy incorporates both types of information and access to expert information enhances the efficiency of the majority decision however there is also a class of potentially inefficient equilibria where a supermajority always follow expert information and the majority decision does not aggregate private information in the laboratory the majority decisions and the subjects voting behaviour were largely consistent with those in the class of inefficient equilibria we found a large efficiency loss due to t he presence of expert information especially when the committee size was large we suggest that it may be desirable for expert information to be revealed only to a subset of committee members

barriers to massachusetts forest landowner participation in carbon markets u s forests including family owned forests are important carbon sinks and sources for carbon sequestration family forest owners constitute a significant portion of the overall forestland in the u s but little is known about their preferences for participating in carbon sequestration programs the goal of this research is to understand what motivates massachusetts family forest owners to participate in carbon markets the study estimates the probability these landowners would engage in carbon sequestration programs using data from a survey of 930 massachusetts family forest owners results from a random effects ordered probit indicate that under a carbon scenario similar to the current voluntary scheme very few of these landowners would be interested in participating supply analysis indicates these landowners are more influenced to participate by factors other than price regression analysis results suggest that survey respondents are concerned about early withdrawal penalties additionality requirements and contract length forest owner harvesting plans opinions about forest usage and beliefs about climate change all play a significant role in the decision to participate the study suggests that policy makers should consider the reasons behind these low participation rates because private forest owners could play a pivotal role in the carbon sequestration potential of forests

addressing negative willingness to pay in dichotomous choice contingent valuation this paper has four purposes first we outline the controversy surroundingthe issue of negative willingness to pay wtp in contingent valuation cv studies second we use monte carlo simulation to examine theperformance of alternative distributionalassumptions in estimating wtp in the presenceof varying proportions of the populationholding negative wtp values we focus ondichotomous choice cv dc cv where negativewtp values may be especially difficult todetect third we extend the simulation toinvestigate the performance of the mixturemodels that have recently been proposed forhandling identifying non positive wtp values fourth we extend the simulation to investigatethe performance of the nonparametric lowerbound turnbull approach results indicate thatthe relative performance of the dc cv modelingalternatives evaluated here which assumepositive wtp varies across the simulationsetting e g proportion of negative wtp butnone can be said to reasonably solve theproblem ex post this underscores theimportance of ex ante efforts to identify ifnegative wtp is likely to be prominent in agiven valuation setting in such cases appropriately handling negative wtp must beaddressed through ex ante survey design andmodeling choices that allow negative wtp

landscape externalities from onshore wind power the expansion of renewable energy is a central element of the german federal government s climate and energy policy the target for 2020 is to produce 30 of the electricity from renewable energies wind power has been selected to be a major contributor to this change replacing old wind turbines by modern ones and building new turbines on land will be crucial in meeting this target however the expansion of onshore wind power is not universally accepted in several regions of germany residents are protesting against setting up new wind turbines to determine the negative effects two choice experiments were applied in westsachsen and nordhessen germany in both regions the externalities of wind power generation until 2020 based on today s state of technology were measured the results show that negative landscape externalities would result from expanding wind power generation using latent class models three different groups of respondents experiencing different degrees of externalities were identified

uncertainty and measurement error in welfare models for risk changes abstract most welfare models of environmental or mortality risk reductions assume that risks are exogenously determined and known with certainty however a growing body of research suggests that uncertainty about risks can affect choices over risky prospects i present a decision weighted random utility model that decomposes welfare losses into those attributable to an increase in the deterministic component of risk and those attributable to uncertainty about risk i apply the model to an illustrative dataset of subjects perceived mortality risk and willingness to accept the risk of nuclear waste transport i estimate the model using lewbel s 2000 strictly exogenous regressor approach to account for endogeneity bias and measurement error subjects display aversion to both risk and uncertainty about the risk of a transport accident so that increases in either leads to social welfare losses roughly 12 of the external cost of nuclear waste transport is attributable to the public s uncertainty about transport risk

on a political solution to the nimby conflict scale economy in the construction and operation of public facilities such as landfills calls for cooperation among communities to build a common facility arthur o sullivan 1993 such a facility is a mixture of a public good and a private bad and hence leads to strong opposition by communities to locate it in their vicinity bruno s frey et al 1996 this is one of the most serious environmental concerns of recent years and is known as nimby not in my backyard in this paper we study the hypothesis that a democratic political process creates an adequate mechanism for the resolution of the nimby conflict the intuitive explanation is simple a nimby conflict is likely to induce lobbying and symmetric pressures by all threatened communities in the relevant region as is well known gene m grossman and elhanan helpman 1994 when subject to symmetric pressures politicians stick firmly to principles and function most efficiently the existing literature on the siting of noxious facilities focuses mainly on normative issues such as welfare maximizing siting via decentralized community based mechanisms e g howard kunreuther and paul r kleindorfer 1986 robert c mitchell and richard t carson 1986 and deborah minehart and zvika neeman 2002 evidently however such mechanisms have seldom been practiced e g stephen k swallow et al 1992 the current study adopts a positive approach integrating a political economic framework with a model of a competitive real estate market in the theoretical section a government of a linear two city economy determines the location of a noxious facility which affects the equilibrium in the real estate market and induces the spatial distributions of price and population the government is subject to political pressures by city level lobbies of landowners both landlords and home owners in general the political equilibrium and the socially optimal siting differ however the more equitable the distribution of landownership in the region the smaller the difference at the limit when property distribution is perfectly equitable and all cities participate in the political arena the government locates the facility at the socially optimal site the analysis proceeds by identifying additional conditions under which the political equilibrium siting coincides with the socially optimal location and with an empirical analysis in the empirical section the theoretical framework is extended to account for a multiple city region and is calibrated to assess the prospects of the political system for resolving the nimby conflict in the context of landfill siting in israel it is shown that if all cities in the region form political lobbies and the politicians are not extremely corrupt the political siting is close geographically to the socially optimal location and the difference entails a less than 0 1 percent reduction in social welfare moreover even if the formation of lobbying in the region is incomplete as long as the weight the politicians assign to social welfare is larger than 0 7 the proximity of the politically and socially optimal locations is preserved we interpret the above results as supportive of the hypothesis of an effective political solution to the nimby conflict

an aggregate measure for benefit cost analysis the kaldor hicks kh criterion has long been the standard for benefit cost analyses but it has also been widely criticized as ignoring equity and arguably moral sentiments in general we suggest the use of an aggregate measure khm instead of kh where m stands for moral sentiments khm simply adds to the traditional kh criterion the requirement that all goods for which there is a willingness to pay or accept count as economic goods this addition however runs up against objections to counting moral sentiments in general and non paternalistic altruism in particular we show these concerns are unwarranted and suggest that the khm criterion is superior to kh because it provides better information

equilibrium play in large group market entry games coordination behavior is studied experimentally in a class of noncooperative market entry games featuring symmetric players complete information zero entry costs and several randomly presented values of the market capacity once the market capacity becomes publicly known each player must decide privately whether to enter the market and receive a payoff which increases linearly in the difference between the market capacity and the number of entrants or stay out payoffs for staying out are either positive giving rise to the domain of gains or negative giving rise to the domain of losses the major findings are substantial individual differences that do not diminish with practice aggregate behavior that is organized extremely well in both the domains of gains and losses by the nash equilibrium solution and variations in the population action strategies with repeated play of the stage game that are accounted for by a variant of an adaptive learning model due to roth and erev 1995

does policy process influence public values for forest water resource protection in florida abstract forest ecosystems play a critical role in protecting water resources yet the neoclassical stated preference assumption is that willingness to pay wtp for forest conservation is solely a function of the ecosystem services provided by these lands thus little attention has been paid to the importance of policy processes as potentially influential drivers of wtp using a statewide web based survey in florida us and a relatively novel valuation approach i e best worst choice we examine public preferences for clean water benefits e g recreation drinking water resources as well as common conservation policy processes such as land acquisition and financial assistance for landowners we found forest water protection programs provide an annual average of 154 230 million in clean water benefits and a significant portion of that value was associated with the policy process attitudes and beliefs about whom forests should be managed for and who should manage forests were also found to influence wtp behaviors we conclude that including policy process information in the valuation survey allows respondents to better determine changes in utility among realistic policy alternatives our findings have important implications for wtp estimation techniques and public participation in environmental policy design

the effects of pensions on household wealth a reevaluation of theory and evidence this paper examines the extent to which households offset pension wealth with reductions in other wealth systematic econometric biases imply that the estimated offsets in previous empirical studies are smaller than the true offset and may even have the wrong sign new empirical estimates that do not correct for the biases generate little offset between pensions and other wealth estimates that correct for the biases show substantially more offset a smaller impact of pensions on overall saving than in most previous studies the estimates also indicate that the effects of pensions on wealth vary significantly across households

competitive bluffing an examination of a common practice and its relationship with performance bluffing a common and consequential form of competitive behavior has been comparably ignored in the management literature even though misleading one s rivals is suggested to be an advantageous skill in a multifaceted and highly competitive environment to address this deficiency and advance scholarship on competitive dynamics our study investigates the moral reasoning behind competitive bluffing and using a simulated market entry game examines the performance effects of bluffing findings suggest that decision makers views on the ethicality of bluffing competitors differ from their beliefs on the ethicality of misleading other organizational stakeholders analysis also indicates that decision makers who view competitor bluffing as more ethical less unethical are more willing to engage in competitive bluffing finally while bluffing is often thought to be an effective business practice results show that in the context of repeated interaction bluffing is not conducive to high levels of performance and in fact can have undesirable consequences

social security and households saving this paper provides new evidence on the substitutability between private and pension wealth by exploiting the italian pension reform of 1992 we use a difference in difference estimator that exploits the differential effects of the reform on individuals belonging to several yea of birth cohorts and different occupational groups we find convincing evidence that saving rates increase as a result of a reduction in pension wealth by allowing for the possibility that substitutability changes with age we find that substitutability is particularly high and precisely estimated for workers between 35 and 45

choice modelling and its potential application to tropical rainforest preservation abstract loss of rainforest occurs in part because of a global market failure problem markets routinely transmit signals about international demands for forest products such as timber but fail to transmit signals about demands for preservation to make efficient resource allocation choices decision makers need some framework to estimate the non use values that might be held by an international community for rainforest preservation non market valuation techniques can be used for this purpose but framing and other problems limit the application of the contingent valuation method cvm an alternative technique choice modelling cm appears to hold some promise because it can be used to model complex situations and to frame choices consistent with real life choices in this paper a cm experiment to assess the values that australians hold for rainforest conservation in vanuatu is reported the experiment disguises effectively the issue of interest rainforest conservation in vanuatu within a pool of other conservation locations also the experiment demonstrates that choice tradeoffs may involve a variety of environmental and socio economic factors rather than be concentrated on some monetary tradeoff the results demonstrate that a variety of predictive and valuation tools can be gained from a cm experiment and suggest that further development is warranted

are risk regulators rational evidence from hazardous waste cleanup decisions a large literature in economics and social science focuses on how people reason about risks reactions of individuals to risk frequently depart from behavior predicted by full information variants of expected utility theory risk regulators are human and are subject to political pressures that are reflective of people s attitudes toward risk as a result the public policies they espouse may reflect errors in judgment about risk many biases stem from misperceptions of risk individuals overestimate small probabilities overestimate the risks associated with highly publicized dangers and have preferences over the manner not just the magnitude in which risks arise environmental risks associated with hazardous waste sites may be particularly prone to such errors since they involve small risks that are highly publicized indeed the general public ranks hazardous waste sites as the leading environmental risk a growing literature also analyzes how the decisions of risk regulators depart from choices predicted in a standard benefit cost framework as roger g noll and james e krier 1990 point out since regulators are both human and political their decisions may reflect risk biases regulators may exhibit these biases as individuals and because their constituents will express regulatory demands based on risk perceptions risk regulators may take into account the identity of the parties exposed to risk the level of scrutiny by interest groups the nature of congressional representation of affected constituents and the degree of political activity by potentially exposed individuals 3 errors in risk perceptions and risk decisions cause individuals to diverge from expected utility maximization similar errors by policy makers and the influence of risk politics cause regulators to diverge from social welfare maximization this paper examines decisions made by federal and state regulators at hazardous waste sites addressed by the superfund program to determine how their decisions diverge from those predicted by expected utility theory and benefitcost analysis we analyze whether risk perceptions and politics influence two decisions central to the how clean is clean debate at superfund sites the selection of chemical cleanup targets and the expenditure of remediation funds at these contaminated sites we also explore the interactive influence of risk perception factors and political demands previous research on the regulation of chemical risks in standard setting indicates that decisions reflect evidence of risk biases and responsiveness to political factors in assessing the determinants of the epa s decision to cancel pesticide registration maureen l cropper et al 1992 found that the epa was more likely to cancel a pesticide in instances featuring higher risks to the maximally exposed individual user lower benefits associated with continued use of the pesticide higher values of intervention by environmental groups mea viscusi harvard law school harvard university cambridge ma 02138 hamilton sanford institute of public policy duke university durham nc 27708 we have benefited from the comments from two referees and the excellent research assistance of jason bell kristen blann jahn hakes and robert malme research support was provided under cooperative agreement no cr 823604 01 from the u s environmental protection agency office of policy planning and evaluation dr alan carlin and dr suzanne giannini spohn served as contract officers all views and errors expressed are our own l see u s environmental protection agency epa 1987 for a report on this survey evidence 2 this theme is also articulated in richard j zeckhauser and viscusi 1990 noll 1989 provides a more general assessment of the interaction between political concerns and regulatory policy which is a central theme of this paper 3political factors have long played a prominent role in local hazardous waste policies see among others linda cohen 1981 howard kunreuther and douglas easterling 1990 1992 and kunreuther and rajeev gowda 1990

whatever the customer wants the customer gets exploring the gap between consumer preferences and default electricity products in germany abstract in liberalized electricity markets residential customers can choose their preferred provider and select among a variety of different electricity products including green power options successful product design and marketing strategies for green electricity may provide electricity providers with a competitive advantage while at the same time contributing to energy policy objectives this requires however a thorough understanding of customer preferences we investigate the relative importance of different product attributes in creating customer value and find that price and electricity mix are the two most important attributes the german electricity customers we surveyed in 2009 expressed an implicit willingness to pay a premium of about 16 for electricity from renewable sources we conclude that consumers are willing to pay a significant price premium for an upgrade from the current default electricity mix in germany to a more environmentally friendly default electricity mix and discuss implications for marketing strategy and energy policy our findings are based on a dataset of 4968 experimental choices made by 414 german residential consumers collected in a stated preference survey

option wealth and bequest values the value of protecting future generations from the health risks of nuclear waste storage to assess the relative importance of current costs and future benefits of nuclear waste storage we develop a simple model of bequest value the basic model of nonparternalistic altruism is extended to account for the uncertain nature of the externality the model is applied estimating the social costs of storing high level nuclear waste at a central repository at yucca mountain nevada we find that the total ex ante social cost per household associated with health and safety risks is 17 128 annually over half is attributed to a desire to protect future generations from the risk of nuclear waste storage

asset markets as an equilibrium selection mechanism coordination failure game form auctions and tacit communication abstract in this paper we explore the possibility that asset markets provide a means of tacit communication which may allow subjects to coordinate on the payoff dominant equilibrium in an underlying coordination game we find that the existence of a market price for the right to play does communicate information about the equilibrium selection problem specifically behavior never converged to the efficient outcome when subjects were endowed with the right to participate but always converged to the efficient outcome when subjects purchased the right to participate journal of economic literature classification numbers c720 g120

willingness to pay and compensation demanded experimental evidence of an unexpected disparity in measures of value aside from possible income effects measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent unexpectedly wide variations between these sums however have been noted in survey responses to hypothetical options this paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations the results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure which would appear to call into some question various rules of entitlement damage assessments and interpretations of indifference curves

eliciting public preference for nuclear energy against the backdrop of global warming one of the most important issues related to sustainability is to reduce the use of fossil fuels due to the reduction in greenhouse gases ghg emission nuclear power results in low carbon emissions and is thus important to mitigating the adverse effects of global warming and climate change however the downside of nuclear power cannot be overlooked and consequently nuclear power is a controversial issue in many countries around the world thus an important question concerns how people should support nuclear power do the climate and energy security benefits of nuclear power outweigh its risks and costs therefore we use a modified double bounded contingent valuation model to explore the attitudes and the willingness to pay wtp of a country in order to demonstrate its implications for policy we confirm that supporters and opponents of nuclear power are balanced both in terms of their numbers and in terms of their wtp the policy implication is that people do not support any dramatic increase or reduction in nuclear power and that nuclear power should still be an important means of generating electricity in taiwan the current share of nuclear power in electricity generation of 20 should be maintained in the near future

pension wealth and individual saving some new evidence attemprs to measure the tmpact of soctal security and private pensions on household saving have occupied much of the literature in empirical public finance over the past decade empirical estimates of those impacts have been quite varied see the discussion in aaron 1982 this paper provides new estimates of the impact of changes in holdings of social security and private pension annuities on the level of non pension wealth the data examined are drawn from surveys conducted for the u s president s commission on pension policy the impact of the social security system on individual saving has been a concern since feldstein s 1974 pioneering paper l the theoretical argument of feldstein and of barro 1974 1978 centers around the funding status of social security i e the degree to which an unfunded social security system reduces private saving empirical tests of the effects of social security on saving in this line of research have been conducted in the perfect certainty version of the life cycle model modigliani and ando 1957 modigliani and brumberg 1954 in that approach social security affects non pension saving through its impact on individual intertemporal budget constraints disposable income during the working period falls by the amount of

are risk benefit tradeoffs possible in siting hazardous facilities ever since alfred marshall introduced the notion of consumer s surplus into the literature as a measure of well being economists have been interested in determining the amount of compensation required to leave individuals indifferent between the status quo and a new situation where less of a commodity can be consumed for example due to an increase in prices the hicksian and kaldor hicks criteria of specifying compensation variations may be appropriate for normal market goods where there is a wellspecified demand curve the analysis is less applicable for dealing with environmental resources where elements of risk are involved or there exist public good features that make it difficult to estimate people s values for different amenities v kerry smith 1989 this paper investigates the question of the appropriate role that providing benefits to a host community possibly in the form of compensation can play in improving the chances of siting a facility that is perceived to be potentially hazardous in section i we develop a simple twoperiod expected utility model to explain preferences for benefit packages the empirical analysis examining the predictive power of this model will be related to the following problem of current interest the u s congress is attempting to locate a site for storing high level radioactive waste from commercial nuclear power plants in the united states an underground repository is to be constructed 2000 feet below the earth s surface for the purpose of permanently storing nuclear waste shipped in casks from power plants around the country once filled to capacity the repository would be sealed to minimize any radiation leakage based on the results of a telephone survey of residents of nevada regarding their attitudes toward a high level nuclear waste repository we suggest ways that the expected utility model might be modified to take into account behavioral factors that are not normally considered part of individual models of choice under uncertainty these factors may be useful in determining when compensation will be a useful tool in facilitating the siting process

limits to substitution and irreversibility in production and consumption a neoclassical interpretation of ecological economics abstract there are many methodological approaches within ecological economics one of the principal modes of analysis is a modified version of the standard neoclassical model this paper examines the parallels which emerge between the ideas of some ecological economists concerning production and the ideas of others concerning consumption when these ideas are interpreted in the neoclassical paradigm it is well known that ecological economics is characterized by arguments concerning limits to substitution between inputs energy natural capital etc vs manufactured capital labor etc in production and the implications these have for sustainability however various authors have also expressed concerns regarding limits to substitution in consumption either between environmental assets and other goods or between basic needs commodities and other goods though the specific reasons for non substitution are different in the production and consumption cases the underlying theme is that individual commodities and other inputs have unique physical or other properties which make them poor substitutes ideas about irreversibility in production and economic development are also prominent in ecological economics likewise many authors have argued for similar irreversibilities in consumption behavior in analogy to the term technological change i coin the term preferential change to describe these phenomena the linking themes in this case are that the economy environment system is evolutionary in character and that external effects intended and unintended consequences of actions or processes imposed on other parties or resources are all pervasive

the effect of risk characteristics on the willingness to pay for mortality risk reductions from electric power generation the objective of this study is to estimate willingness to pay wtp for the reduction of mortality risks caused by fossil fuel natural gas coal and oil versus nuclear electric power generation systems and to examine the influence of risk characteristics involved with electric power generation on wtp a choice experiment was conducted to achieve these objectives the attributes for nuclear risks in the experiment included the probability of disasters and the expected losses if a disaster occurs we find evidence of i a baseline effect where wtp is sensitive to hypothetical versus actual baseline expected mortality ii a labeling effect where surprisingly the term nuclear has no effect on wtp but the term fossil fueled power generation results in lower wtp and iii disaster aversion meaning that people focus on the conditional loss from a nuclear disaster not the probability we also find that the wtp for reducing deaths from a nuclear disaster is about 60 times the wtp for routine reducing fossil fuel generation related deaths

pension wealth and household savings in europe evidence from sharelife we use recently collected retrospective survey data to estimate the displacement effect of pension wealth on household savings the third wave of the survey of health ageing and retirement in europe sharelife collects information on the entire job history of the respondent a feature missing in most previous studies we show that addressing measurement error problems is crucial to estimate the displacement effect when using survey data we find that each euro of pension wealth is associated with a 47 61 cent decline in non pension wealth using robust median regression in the presence of biases from measurement errors and omitted unobserved variables we estimate a lower bound to the true offset between 17 and 30 significantly different from zero instrumental variables regression estimates although less precise suggest full displacement