A Differential Motivation Account for the Disparity between Willingness to Accept and Willingness to Pay

Abstract

We take a motivated reasoning perspective to examine the robust finding that a seller’s willingness to accept (WTA) to give up a good is typically higher than a buyer’s willingness to pay (WTP) to obtain the good. We propose that the seller/buyer role and/or the WTA/WTP elicitation activate different motivations. Four studies, using different ways to test for motivational processes, demonstrate how motivational processes influence the WTA-WTP disparity in a predictable and systematic way. Study 1 shows that the WTA/WTP elicitation activates distinct motivations, and that altering the medium of exchange reverses the motivations. Study 2 shows that eliciting WTA/WTP using an auction mechanism activates multiple motivations, attenuating the WTA-WTP disparity. Study 3 demonstrates that activating regulatory focus that is inconsistent (vs. consistent) with the motivation activated by the WTA/WTP elicitation attenuates the WTA-WTP disparity. Study 4 demonstrates that WTA/WTP elicitation may bias perceptions of an ambiguous stimulus and that the WTA-WTP disparity increases with delay. Together, our findings provide new insights into the valuation of sellers and buyers by highlighting the role of motivational processes underlying the WTA-WTP disparity.