Causal effects of information friction on willingness to pay for hurricane-resistant buildings

We investigate the causal effects of information provision on willingness to pay (WTP) for precautionary building standards. In a randomized stated preference field experiment, we present video evidence that hurricane-resistant building standards outperform traditional building standards to a random...

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Bibliographic Details
Published in:Journal of behavioral and experimental economics 2024-12, Vol.113, p.102297, Article 102297
Main Authors: Awondo, Sebastain N., Powell, Lawrence S.
Format: Article
Language:English
Subjects:
Disaster risk reduction
Field experiments
Hurricane-resistant buildings
Information friction
Willingness to pay
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Summary:We investigate the causal effects of information provision on willingness to pay (WTP) for precautionary building standards. In a randomized stated preference field experiment, we present video evidence that hurricane-resistant building standards outperform traditional building standards to a random sample of homeowners. Our analysis reveals evidence consistent with causal effects of video information on WTP for hurricane-resistant buildings. Overall, alleviating performance information friction increases WTP by $634 on average and three times more among risk-neutral homeowners if the WTP payment card range is not truncated. •Adoption of hurricane-resistant buildings remain relatively low.•Information friction about its performance is a main disincentive.•Alleviating video information friction increases willingness to pay by $634 on average.•The effects vary with risk attitudes and three times higher among risk-neutral homeowners.
ISSN:2214-8043
DOI:10.1016/j.socec.2024.102297