• Economics
• Published 1999
• DOI:10.1006/jeem.1999.1070

Information and the Divergence between Willingness to Accept and Willingness to Pay

@inproceedings{Kolstad1999InformationAT,
  title={Information and the Divergence between Willingness to Accept and Willingness to Pay},
  author={Charles D. Kolstad and Rolando M. Guzm{\'a}n},
  year={1999}
}

• Charles D. Kolstad, Rolando M. Guzmán

Abstract There is considerable empirical and experimental evidence that there is a divergence between willingness to accept compensation to give up a good and willingness to pay to obtain a good. This divergence persists even when the good in question is small relative to income, a result in apparent conflict with standard economic theory. This paper develops a theoretical bidding model with costly information acquisition to explain this divergence. The model generates a gap between offers to… CONTINUE READING

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