On the Computation of Willingness-to-pay in Random Utility Models

  title={On the Computation of Willingness-to-pay in Random Utility Models},
  author={Daniel Mcfadden},
Welfare evaluation of a policy that alters the quality of a resource can often be cast as the problem of calculating mean Willingness to Pay (WTP) in a population of consumers with random utilities induced by varying tastes and budgets. This interpretation is particularly useful when some of the components of choice at the level of the individual are discrete. This paper reviews the theory of WTP measurement, and provides easily computed WTP bounds. It reviews generalized extreme value (GEV… CONTINUE READING
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