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ISSN : 1226-9654

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Vol.22 No.4
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The effect of substitute on WTA and WTP

The Korean Journal of Cognitive and Biological Psychology / The Korean Journal of Cognitive and Biological Psychology, (P)1226-9654; (E)2733-466X
2010, v.22 no.4, pp.601-619
https://doi.org/10.22172/cogbio.2010.22.4.010


& (2010). The effect of substitute on WTA and WTP. The Korean Journal of Cognitive and Biological Psychology, 22(4), 601-619, https://doi.org/10.22172/cogbio.2010.22.4.010
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Abstract

People tend to set a higher price on the same good when they are in selling position (WTA; willingness to accept) than in buying position (WTP; willingness to pay). One of the main factors that affect this tendency is the availability of substitute. When there is an available substitute, people can obtain similar utility from it so that WTA and WTP will not exceed the price of the substitute and the disparity between WTA and WTP will be reduced. In experiment 1, we examined whether availability and subjective substitutability of the substitute can reduce WTA-WTP disparity. Results showed that availability of the substitute reduced the WTA-WTP disparity in median values but subjective substitutability did not. In experiment 2, we examined whether price information of the substitute can reduce the WTA-WTP disparity. While one group(price group) was told the price of the substitute, the other group(control group) was not. Results showed that WTA was significantly higher than WTP even in the price group, but the median values of WTA and WTP in both groups became the same. Furthermore, magnitude of the disparity between WTA and WTP in price group was decreased by 55%, compared with control group. In sum, the results of two experiments indicate that the availability and the price information of substitute are more important factors than subjective substitutability. Finally, we suggested further research directions.

keywords
the availability of substitute, WTA, WTP, 대체제 가용여부, WTA, WTP

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