Skip to main content
Log in

Does anonymity affect the willingness to accept and willingness to pay gap? A generalization of Plott and Zeiler

  • Original Paper
  • Published:
Experimental Economics Aims and scope Submit manuscript

Abstract

Conventional value-elicitation experiments often find subjects provide higher valuations for items they posses than for identical items they may acquire. Plott and Zeiler (Am Econ Rev 95:530–545, 2005) replicate this willingness-to-pay/willingness-to-accept “gap” with conventional experimental procedures, but find no gap after implementing procedures that provide for subject anonymity and familiarity with the second-price mechanism. This paper investigates whether anonymity is necessary for their result. We employ both types of procedures with and without anonymity. Contrary to predictions of one theory—which suggest social pressures may cause differences in subject valuations—we find, regardless of anonymity, conventional procedures generate gaps and Plott and Zeiler’s does not. These findings strongly suggest subject familiarity with elicitation mechanisms, not anonymity, is responsible for the variability in results across value-elicitation experiments. As an application to experimental design methodology, there appears to be little need to impose anonymity when using second-price mechanisms in standard consumer good experiments.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

Notes

  1. One may also refer to this mechanism as a Becker-DeGroot-Marschak (BDM) mechanism (Becker et al. 1964).

  2. In a later work, Plott and Zeiler (2011) state, “Our results demonstrate that the gap for commodities can be turned on and off by implementing procedures designed to control for subject misconceptions about the value elicitation procedures. (p. 1012)” Several field studies also suggest that experienced professionals do not exhibit the WTA-WTP gaps (List 2003; Engelmann and Hollard, 2010), but these studies do not use the second-price mechanism so it is debatable whether familiarity with the second price mechanism and professional experience in the field are the same attribute.

  3. See our supplemental materials for these packets.

  4. See our supplemental materials for all items.

  5. We differ in one respect: Plott and Zeiler predetermined fixed offers, but ran lotteries live. To save time, we predetermined both our lotteries and fixed offers.

  6. In one of their sessions, Plott and Zeiler ran the mug round immediately after the unpaid practice rounds, and then 14 lottery rounds. They still achieved no WTA-WTP gap. We did not run this ordering in our design.

  7. Mugs were placed in front of all subjects immediately before the mug round.

  8. Experimenters made no effort to block lines of sight or prevent subjects from entering those lines of sight (by moving away from their booth). Nonetheless, the lab is designed so that it is very difficult if not impossible for most subjects to view transactions.

  9. The discrepancy is largely due to the results of one anonymous seller who offered $30.50 as the lowest value for which she would sell her mug. Removing the one subject reduces the mean anonymous WTA to 5.19 (from 7.49) and combined mean WTA to 4.77 (from 5.94) in Table 2. The p values for the three tests comparing WTA and WTP in the anonymous condition (Table 2, row 1) are 0.552, 0.481, 0.819 for t test, Wilcoxon Mann-Whitney, and median tests, respectively. The p values are 0.612, 0.535, 0.650, respectively, for the same tests comparing WTA and WTP combining the results across anonymous conditions (Table 2, row 3). The difference in median WTA versus WTP is much less than the difference in means, reflecting the disproportionate impact of one subject on mean values.

  10. Other regression specifications (robust regression, median regression) and transformations (log, square root) generally produce much lower coefficient estimates for this term. None are statistically significant (p > 0.1). Similar results are found (especially a reduced coefficient) by omitting the subject with a WTA of $30.50.

  11. This difference is significant at the 1 % level (two-tailed t test, Wilcoxon Mann-Whitney) and 2 % level (median test).

References

  • Becker, G. M., DeGroot, M. H., & Marschak, J. (1964). Measuring utility by a single-response sequential method. Behavioral Science, 9(3), 226–232.

    Google Scholar 

  • Brown, T. C. (2005). Loss aversion without the endowment effect, and other explanations for the WTA–WTP disparity. Journal of Economic Behavior & Organization, 57(3), 367–379.

    Article  Google Scholar 

  • Brown, A. L., & Cohen, G. (2012). Does anonymity affect the willingness to accept and willingness to pay gap? Texas A&M University, College Station.

  • Burnham, T. C. (2003). Engineering altruism: A theoretical and experimental investigation of anonymity and gift giving. Journal of Economic Behavior & Organization, 50(1), 133–144.

    Article  Google Scholar 

  • Charness, G., & Gneezy, U. (2008). What’s in a name? Anonymity and social distance in dictator and ultimatum games. Journal of Economic Behavior & Organization, 68(1), 29–35.

    Article  Google Scholar 

  • Dubourg, W. R., Jones-Lee, M. W., & Loomes, G. (1994). Imprecise preferences and the WTP-WTA disparity. Journal of Risk & Uncertainty, 9(2), 115–133.

    Article  Google Scholar 

  • Eckel, C. C., & Grossman, P. J. (1996). Altruism in anonymous dictator games. Games and Economic Behavior, 16(2), 181–191.

    Article  Google Scholar 

  • Engelmann, D., & Hollard, G. (2010). Reconsidering the effect of market experience on the “endowment effect”. Econometrica, 78(6), 2005–2019.

    Article  Google Scholar 

  • Franciosi, R., Kujal, P., Michelitsch, R., Smith, V., & Deng, G. (1996). Experimental tests of the endowment effect. Journal of Economic Behavior & Organization, 30(2), 213–226.

    Article  Google Scholar 

  • Fremling, G. M., & Posner, R. A. (1999). Market signaling of personal characteristics. SSRN eLibrary.

  • Greiner, B. (2004). The online recruitment system ORSEE 2.0—A guide for the organization of experiments in economics, University of Cologne Discussion Paper (www.orsee.org).

  • Hoffman, E., McCabe, K., & Smith, V. L. (1996). Social distance and other-regarding behavior in dictator games. The American Economic Review, 86(3), 653–660.

    Google Scholar 

  • Isoni, A., Loomes, G., & Sugden, R. (2011). The willingness to pay—willingness to accept gap, the ‘‘Endowment Effect’’, subject misconceptions, and experimental procedures for eliciting valuations: Comment. The American Economic Review, 101(2), 991–1011.

    Article  Google Scholar 

  • Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1990). Experimental tests of the endowment effect and the Coase Theorem. Journal of Political Economy, 98(6), 1325–1348.

    Article  Google Scholar 

  • List, J. A. (2003). Does market experience eliminate market anomalies? Quarterly Journal of Economics, 118(1), 41–71.

    Article  Google Scholar 

  • Loewenstein, G., & Issacharoff, S. (1994). Source dependence in the valuation of objects. Journal of Behavioral Decision Making, 7(3), 157–168.

    Article  Google Scholar 

  • Loomes, G., Starmer, C., & Sugden, R. (2003). Do anomalies disappear in repeated markets? The Economic Journal, 113(486), C153–C166.

    Article  Google Scholar 

  • Plott, C. R., & Zeiler, K. (2005). The willingness to pay—willingness to accept gap, the “Endowment Effect”, subject misconceptions, and experimental procedures for eliciting valuations. The American Economic Review, 95(3), 530–545.

    Article  Google Scholar 

  • Plott, C. R., & Zeiler, K. (2007). Exchange asymmetries incorrectly interpreted as evidence of endowment effect theory and prospect theory? The American Economic Review, 97(4), 1449–1466.

    Article  Google Scholar 

  • Plott, C. R., & Zeiler, K. (2011). The willingness to pay—willingness to accept gap, the “Endowment Effect”, subject misconceptions, and experimental procedures for eliciting valuations: Reply. The American Economic Review, 101(2), 1012–1028.

    Article  Google Scholar 

Download references

Acknowledgments

Financial support was provided by the Texas A&M Humanities and Social Science Enhancement of Research Capacity Program. We thank Catherine C. Eckel and Charles R. Plott for helpful comments. We thank José Gabriel Castillo, Carl Green, Haley Harwell, Daniel Stephenson, Ajalavat Viriyavipart, Xiaoyuan Wang, and J. Forrest Williams for help running experiments.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Alexander L. Brown.

Additional information

This research is an extension of Cohen’s undergraduate honors thesis at Texas A&M University.

Electronic supplementary material

Below is the link to the electronic supplementary material.

Supplementary material 1 (PS 103149 kb)

Rights and permissions

Reprints and permissions

About this article

Cite this article

Brown, A.L., Cohen, G. Does anonymity affect the willingness to accept and willingness to pay gap? A generalization of Plott and Zeiler. Exp Econ 18, 173–184 (2015). https://doi.org/10.1007/s10683-014-9394-z

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10683-014-9394-z

Keywords

Navigation