The effects of experience on preference uncertainty: theory and empirics for environmental goods

This paper develops a model of demand estimation in which consumers learn about their true preferences through consumption experiences. We develop a theoretical model of Bayesian updating, perform comparative statics over the model, and show how the theoretical model can be consistently incorporated into a reduced form econometric model. We then estimate the model using data collected for two quasi-public goods. We find that the predictions of the theoretical exercise that additional experience with a good will make consumers more certain over their preferences in both mean and variance are supported in each case.


Issue Date:
2013-02
Publication Type:
Conference Paper/ Presentation
Record Identifier:
http://ageconsearch.umn.edu/record/152155
PURL Identifier:
http://purl.umn.edu/152155
Total Pages:
35
JEL Codes:
C51; D83; Q51; H43




 Record created 2017-04-01, last modified 2018-01-22

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