Learning in a Hedonic Framework: Valuing Brownfield Remediation

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6 Scopus citations

Abstract

Incomplete information in property value hedonic models can bias estimates of marginal willingness to pay (MWTP). Using brownfield remediation as an application, this article recovers hedonic values from a dynamic neighborhood choice framework that allows households to learn about brownfield contamination in a Bayesian fashion before choosing where to live. I find that ignoring learning yields nontrivial biases to the MWTP estimate. This has important implications for hedonic valuation if agents are imperfectly informed. Estimates are used to calculate information's value had it been withheld from the public and to assess heterogeneity in information's value along site and homebuyer demographics.

Original languageEnglish
Pages (from-to)1355-1387
Number of pages33
JournalInternational Economic Review
Volume60
Issue number3
DOIs
StatePublished - 2019

Bibliographical note

Publisher Copyright:
© (2019) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association

ASJC Scopus subject areas

  • Economics and Econometrics

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