When does a referent problem affect WTP for the target

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When does a referent problem affect WTP for the
target?

• Nicolao Bonini1
• Ilana Ritov2
• Michele Graffeo1
• 1University of Trento , 2Hebrew University

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Willingness to Pay, WTP

• The greatest sum of money a person is willing to
  pay for a good
• WTP evaluations are generated by
• Spontaneous affective reactions
• Implicit comparison of the item with elements of
  its natural set/category, spontaneously evoked.
• The evaluations within a natural category tend to
  maintain a stable ordering.

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Example of comparison with an evoked set.
Public Good Preservation of Dolphins

• Example of Ordering
• Bears
• Deer
• Dolphins
• Moufflon
• The rank order tend to remain
• Stable through time

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Joint Evaluation of two public goods

• Example (Kahneman e Ritov, 1994)
• Preservation of Dolphins VS Skin cancer
  prevention program
• Two problems that differ in
• Category
• Relative Importance

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Simultaneous Evaluation
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Research Goal
With this simultaneous evaluation we intend
to Evaluate the effect of the variable
Category of the Referent Problem (Same Category
VS Different Category) While controlling for the
variable Relative Importance of the Reference
Problem (High VS Low)
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Research Hypothesis

• If Referent and Target problems belong to the
  same category
• The Target problem is compared with its natural
  set
• WTP is not influenced by the relative importance
  of the Referent problem
• WTP does not differ from the isolation condition

• If Referent and Target problems do not belong to
  the same category
• The Target problem is compared with a new set of
  items
• WTP is influenced by the relative importance of
  the Referent problem

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Study 1 - Method

• Control for relative importance of problems
• (30 persons, 37 problems evaluated, scale 1-7)
• Willingness to Pay
• (300 persons, 3 Target problems, 6 conditions)
• Request are you willing to give a contribution?
  (Yes/No)
• If you are willing, how much would you offer? (
  __ )

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Study 1 Example
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Study 1 - Results
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Results Study 1
Condition 1-4 Neither the percent of
contributors nor the mean contribution for the
target problem vary significantly across
conditions Condition 5-6 The percent of non-zero
contributors was significantly higher in the
group with the low referent problem than in the
group with the high one (Chi-square5.296,
p.02). Mean WTP in the two groups did not
significantly differ.
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Study 2 - Method

• Control for relative importance of problems
• (88 persons, 24 problems evaluated, scale 1-10)
• Willingness to Pay
• (306 persons, 2 Target problems, 4 conditions)
• Request are you willing to give a contribution?
  (Yes/No)
• If you are willing, how much would you offer? (
  __ )

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Study 2 Example
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Target 1 Scout youth movement
Target 2 buildings in Haneviim street
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Study 2 - Results
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Results Study 2
As in the previous experiment we have a
significant effect of the variable Relative
Importance only in the Dissimilar Category
condition (?? 8.210, plt.01). This effect is not
significant in the Similar Category condition (??
.453, p.501)
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Conclusion

• The evaluation of a target problem was not
  substantially modified when it was judged in the
  context of another problem from the same domain.
• On the contrary evaluation of the target problem
  in the context of dissimilar problems modifies
  the willingness to contribute for the problem, in
  the direction predicted by contrast The
  willingness to contribute for the target was
  lower in the context of a high-ranking referent
  problem than in the context of a low-ranking one.

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Thanks for your attention