Title: Measuring the willingness-to-pay for others' consumption: an application to joint decisions of children
Authors: Bruyneel, Sabrina
Cherchye, Laurens
Cosaert, Sam
De Rock, Bram
Dewitte, Siegfried
Issue Date: 2014
Publisher: KU Leuven, CES
Series Title: CES - Discussion paper series, DPS14.22 pages:1-27
Abstract: We propose a method to quantify the willingness-to-pay for the consumption of others in group decisions. Our method is based on revealed preference theory. It measures willingness-to-pay for others' consumption by evaluating positive consumption externalities in monetary terms. Within the framework of cooperative (i.e. Pareto efficient) consumption behavior, we introduce a selfishness parameter that defines a continuum of models that are characterized by varying degrees of consumption externalities. We use our method to analyze decisions made by dyads of children in an experimental consumption setting. We find that children's consumption decisions are systematically characterized by externalities (i.e. non-selfish). But we also observe that there is substantial heterogeneity across children, which we can relate to differences in age, gender and degree of friendship between dyad members.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Research Center of Public Economics, Leuven
Research Centre for Marketing and Consumer Science, Leuven
Faculty of Business and Economics, Campus Kulak Kortrijk – miscellaneous
Faculty of Economics and Business, Leuven - miscellaneous
Mathematics, Campus Kulak Kortrijk
Mathematics - miscellaneous

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