Estimating Willingness to Pay: Why and How?
The main purpose of this article is to advance a set of conditions which demand-revealing mechanisms must pass in order to be politically acceptable for real-world applications and—to begin with—for real-world experiments. Without such non-laboratory experiments, real progress seems unlikely to take place in this field. So far, there are few indications that these conditions can be met with respect to the proposals made in the literature on public goods. One possible example of a mechanism that meets the “acceptability” conditions is given here. In addition, we present some comments as to why demand-revealing mechanisms constitute an important economic problem, a view which has recently been questioned.
KeywordsPublic Good Public Choice Economic Incentive True Preference Divisible Good
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