User:DomBarclay/sandbox
The willingness to accept (WTA) is ....
Economic Theory and Experimental Results
[edit]Basic economic theory argues that there should be little difference between WTA and WTP. However, experimental research shows that there is a gap between WTA and WTP. With WTA higher than WTP. At least three main theories have been formed on the disparity between WTA and WTP and are explained below.
The income effect
[edit]The Income effect argues that the reason for disparity between WTA and WTP lies within the inability to afford past a certain point. Hence, there is an upper-bound price people are able to pay, whereas there is no upper-bound with respect to what people are willing to accept.