Willingness to Pay

Willingness to pay (WTP) is a measure of the maximum amount that an individual is willing to sacrifice to procure the benefits from a desired good or service or to avoid the loss from something not desired. A companion concept is willingness to accept (WTA), which denotes the amount a person is willing to receive in trade either for a possessed good or for some sort of loss. These two measures are presumed to express the maximum value (WTP) of either a good or an avoidance of harm and the minimum compensation (WTA) required to give up a good or to endure a loss. In other words, these two concepts express an individual’s “reservation price” for some change in circumstances involving personal choice, and they ...