Abstract

ABSTRACT:

Based on a survey of more than 5,000 German households and a single- binary-choice experiment in which we randomly split the respondents into two groups, this article explores both households’ willingness to pay (WTP) for power supply security and their willingness to accept (WTA) compensation for a reduced security level. In accordance with numerous empirical studies, we find that the mean WTA value substantially exceeds the mean WTP value in our empirical example by a factor of 3.56. Yet, the WTA-WTP ratio decreases to 2.35 if respondents believe that the hypothetical valuation setting is likely to become true.

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Additional Information

ISSN
1543-8325
Print ISSN
0023-7639
Pages
pp. 196-206
Launched on MUSE
2021-09-28
Open Access
No
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