In a static setting, willingness to pay for an environmental improvement is equal to compensating variation. However, in a dynamic setting characterized by uncertainty, irreversibility, and the potential for learning, willingness to pay may also contain an option value. In this paper, we...

Accurately estimating consumer demand for new products is an arduous task made even more difficult by the fact that individuals tend to overstate the amount they are willing to pay for new goods when asked hypothetical questions. Despite their appeal in eliminating hypothetical bias, marketers...