WEAI/AERE 2012 - Individual Paper Abstract
Title: The Role of Confidence in the Truthful Revelation of Demand
Author(s): Gregory PARKHURST,Department of Economics, Weber State University, 3848 Harrison Blvd. Ogden, UT 84408, USA , 801-626-6792, 801 626-7423, gparkhurst at weber edu; Cliff Nowell, Weber State University
Abstract:
Recent research shows that the disparity between WTP and WTA disappears with market experience and training. In effect, preferences can be refined by eliminating misconceptions. Critics however, state that market feedback and training may shape rather than refine preferences. This paper explores the use of a stated measure of confidence as buyers or sellers as a proxy for misconceptions. The results indicate that confidence matters in the WTA auction but not in the WTP auction. People with higher confidence choose the dominant bidding strategy more frequently when eliciting WTA.