Immersive Virtual Reality and Willingness to Pay

Abstract

This paper illustrates how to improve the immersiveness of an environmental valuation study using virtual reality headsets and real video footage. Recent research has used “virtual environments" to study this issue, however technological advances in virtual reality headsets allow for a far greater degree of immersion. In this study, subjects were randomly shown either a virtual reality video or static pictures of a polluted lake, before and after cleanup. They were then asked to indicate whether they would be willing to pay a random amount to improve lake water quality to the level shown. A discrete choice model is used to estimate and compare the willingness to pay for both groups. In this case study there was no detectable effect on willingness to pay estimates. However, the technology may be beneficial for other valuation scenarios, particularly when the environmental change is complex or difficult for participants to evaluate.