Welfare with Imperfect Foreknowledge: The Case of Risk Aversion

Welfare with Imperfect Foreknowledge: The Case of Risk Aversion <p>ABSTRACT:</p><p>We study the use of discrete choice models in the context of recreation when there may be discrepancy between the anticipated (ex ante) and the experienced quality of site attributes due to imperfect information. Unlike previous literature on the topic, we relax the assumption of risk neutrality. Adopting a model with quasi-linear preferences, we characterize the disparity between ex ante and ex post utility by decomposing expected utility into a term stemming from bias in beliefs and a component representing willingness to pay for reducing uncertainty in site attributes. Our results show that ex post corrections of welfare losses are attenuated by greater dispersion in beliefs about amenities. <i>(JEL D61, Q26)</i></p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Land Economics University of Wisconsin Press

Welfare with Imperfect Foreknowledge: The Case of Risk Aversion

Land Economics, Volume 96 (1) – Feb 6, 2020

Loading next page...
 
/lp/university-of-wisconsin-press/welfare-with-imperfect-foreknowledge-the-case-of-risk-aversion-uxFzbC7ehB
Publisher
University of Wisconsin Press
Copyright
Copyright by the Board of Regents of the University of Wisconsin System.
ISSN
1543-8325

Abstract

<p>ABSTRACT:</p><p>We study the use of discrete choice models in the context of recreation when there may be discrepancy between the anticipated (ex ante) and the experienced quality of site attributes due to imperfect information. Unlike previous literature on the topic, we relax the assumption of risk neutrality. Adopting a model with quasi-linear preferences, we characterize the disparity between ex ante and ex post utility by decomposing expected utility into a term stemming from bias in beliefs and a component representing willingness to pay for reducing uncertainty in site attributes. Our results show that ex post corrections of welfare losses are attenuated by greater dispersion in beliefs about amenities. <i>(JEL D61, Q26)</i></p>

Journal

Land EconomicsUniversity of Wisconsin Press

Published: Feb 6, 2020

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create folders to
organize your research

Export folders, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off