The three not-so-wise manoeuvres behind willingness-to-pay calculations

Abstract

Economists seek to value entities that the lay public describe as 'invaluable' or 'priceless' by extrapolating values from responses probing willingness to pay for probabilistic or partial variants of those entities. This paper explores willingness to pay (WTP) and willingness to accept (WTA) from the perspective of psychology, arguing that both techniques depend on the rigour of human cognition, a rigour which is generally and systematically absent in the lay public.