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.