ON A DISPARITY BETWEEN WILLINGNESS TO PAY AND WILLINGNESS TO ACCEPT UNDER THE RANK-DEPENDENT UTILITY MODEL

Willingness to pay WTP(X) for a lottery X, represented by a finitely-supported probability distribution on R, is the highest amount an individual is willing to pay for X . Willingness to accept WTA(X) is the smallest amount for which an individual would accept the sell of X. We deal with these notions under Rank-Dependent Utility, one of the behavioral models of decision making under risk. Applying some results concerning a comparison of quasideviation means, we characterize the properties of willingness to pay and willingness to accept related to the experimentally observed disparity between them.