IMPRECISE PREFERENCES AND THE WTP-WTA DISPARITY

This article reports the results of a study designed to elicit willing ness to pay (WTP) and willingness to accept (WTA) values for changes i n the risk of nonfatal road injuries. We examine the possibility that individuals' preferences over combinations of wealth, risk, and safety are imprecise, and that this imprecision might result in the observed disparity between WTP and WTA measures of value. The results confirm that individuals' preferences for safety are significantly imprecise, but that this alone is insufficient to explain more than part of the d isparity. Indeed, respondents' estimates of the minimum that they woul d be prepared to accept for a risk increase frequently exceed the maxi mum that they would be prepared to pay for an equivalent risk reductio n.