<p>Your reasoning is not entirely rigorous, Even for a rational agent there can be a small gap between WTA and WTP due to the wealth effect. However, empirically this effect accounts for a very small fraction of the WTA/WTP gap, which is why other explanations are generally preferred.</p>

CC BY-SA 3.0
2017-03-19T11:50:55.903Z
2017-03-19T11:50:55.903Z
Oliv
<p>Suppose a Decision Maker (DM) has willingness to pay (WTP) of 100, and her actual elicited willingness to accept (WTA) is 110, can this DM be a standard rational agent? Why or why not?</p>

<p>My thinking is that if the DM is a standard rational agent, then her WTA should also be 100. Is this correct?</p>

<game-theory><behavioral-economics>
An example of endowment effect
Akul James
# An example of endowment effect

(Asked by: username_0 on 2017-03-19)

Suppose a Decision Maker (DM) has willingness to pay (WTP) of 100, and her actual elicited willingness to accept (WTA) is 110, can this DM be a standard rational agent? Why or why not?

My thinking is that if the DM is a standard rational agent, then her WTA should also be 100. Is this correct?

**Tags:** game-theory, behavioral-economics


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## 1 answers

### Answer by username_1 on 2017-03-19. Score: 0 | Accepted answer

Your reasoning is not entirely rigorous, Even for a rational agent there can be a small gap between WTA and WTP due to the wealth effect. However, empirically this effect accounts for a very small fraction of the WTA/WTP gap, which is why other explanations are generally preferred.


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