Search

In traditional contingent valuation, the researcher seeks the amount a respondent is willing, ceteris paribus, to pay to obtain something. But if a respondent receives a “warm glow” from a yes response, ceteris is not paribus. In estimating willingness to pay (WTP) to reduce environmental impacts from consumption of transportation fuel, we find that respondents who were relatively less environmentally focused in the past receive greater warm-glow benefits from a “yes” response and have greater "warm” WTP (WTP that includes warm-glow benefits). Yet respondents who were relatively more environmentally focused in the past have greater “cold” WTP (WTP excluding warm-glow benefits).

Oil spills and other anthropogenic environmental disasters have economic consequences that transcend losses of business revenue and property damages. Such non-market losses include those accrued by recreational users, as well as by individuals who hold passive use value for the affected environmental resources. We use a series of random utility models to examine the substitution patterns and welfare losses experienced by recreational saltwater anglers in the Southeast U.S. due to the Deepwater Horizon oil spill. The use of a difference ratio to measure changes between pre- and post-spill preferences that allow us to discern substitution patterns in fishing season, catch, and site popularity. We also estimate monetary welfare measures for damages incurred by anglers, as well as the in-kind compensatory restoration that would be required to make anglers whole.

Price search enables consumers to overcome information asymmetries, it can lead to a reduction in price dispersion and it can increase consumer surplus, but search is costly. In this paper, an internet survey is conducted among a random sample of 490 drivers in the State of Ohio to answer the question, when are consumers more likely to search? The internet survey affords us the opportunity to impose exogenous price changes in a random sample of gasoline consumers to examine the decision-making process behind intended search decisions. Results indicate that among the respondents who faced prices below their expected price, only 12% chose to search, whereas 45% searched when prices were above. Results suggest that asymmetric search can be explained by prospect theory, in the sense that consumers evaluate current prices compared to a reference price, and as a consequence they value price increases differently from price decreases. Our findings indicate that in the gasoline retail market, consumers are allowing retailers to extract consumer surplus by exhibiting loss aversion because this behavior deters search when the probability of finding a lower price is highest.

The relationship between norms, self-sanctioning, and people’s decisions about contributing to public goods is complex and often misunderstood in the public goods literature. We develop a model in which individuals hold an injunctive norm indicating how much they believe one should contribute to the public good. From the model we derive the following testable hypotheses: an increase in one’s perception of the norm level of contribution to the public good (1) induces negative self-sanctioning and (2) will lead one to contribute more to the public good, and (3) that contributing to the public good induces positive self-sanctioning. To test these hypotheses, we elicit stated preferences for contributions to an organization which offsets carbon emissions and a proxy for self-sanctioning, change in respondent “self-image.”