The Effect of Power Outages and Cheap Talk on Willingness to Pay to Reduce Outages Carlsson, Fredrik; Martinsson, Peter; Akay, Alpaslan

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Carlsson, Fredrik ; Martinsson, Peter ; Akay, Alpaslan
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Energy Economics
Valuation -- Analysis; Power failures -- Analysis; Analysis
To link to full-text access for this article, visit this link: Byline: Fredrik Carlsson, Peter Martinsson, Alpaslan Akay Keywords: Contingent valuation; Cheap talk; Experience; Power outages Abstract: Using an open-ended contingent valuation survey, we analyze how (i) experience of a power outage due to one of the worst storms ever to hit Sweden and (ii) a cheap talk script affect respondents' WTP to avoid power outages. Experience significantly increases and a cheap talk script significantly decreases the proportion of respondents with zero WTP, and as a result stated WTP is lower with experience and the cheap talk script. The paper concludes with a discussion on the use of valuation studies shortly after the occurrence of an undesirable event. Article History: Received 3 September 2008; Revised 15 January 2011; Accepted 16 January 2011
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