EPRG 1127

Elcin Akcura

Information Effects in Valuation of Electricity and Water Service Attributes Using Contingent Valuation

EPRG1127 | Nontechnical Summary | PDF

Abstract: Consumers constantly make decisions on the goods and services they purchase, in most cases with incomplete information. Many products that are available in stores, in catalogues, or over the internet are not presented with a full list of attributes or technical specifications. Lack of information is most apparent in non-market goods such as utility service attributes. This paper examines information effects on consumers’ willingness to pay (WTP) for a number of electricity and water attributes using two contingent valuation surveys administered in the UK. The attributes considered include WTP for a carbon cleaner electricity fuel mixture as well as increasing security of supply. The results indicate that the quantity and complexity of information can potentially lead individuals to ignore the information presented. The relevance of the attribute to the respondent is found to be a significant motivator in the processing of the information presented. The survey data also reveal a number of socio-economic, attitudinal and behavioural factors that affect WTP for the attributes considered.

Keywords: Contingent Valuation Method, Willingness to Pay, Zero Inflated Ordered Probit Model

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