Theoretical incentive properties of contingent valuation questions: Do they matter in the field?

Schläpfer, Felix; Bräuer, Ingo

doi:10.1016/j.ecolecon.2006.07.006

Cited by 17 publications

(11 citation statements)

References 23 publications

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“…And many do not believe that the presented cost figures correspond to the costs if the policy is implemented (Champ et al, 2002) and may update these figures based on knowledge of their true annual tax bill (Flores and Strong 2007). Naturally, the direction of the anchoring or updating is then systematically correlated with respondent income and produces those exceedingly low income effects observed in stated preference surveys (see Schläpfer, 2006;Schläpfer and Bräuer, 2007). Hence, all of the major inconsistencies observed in the contingent valuation of public goods can be traced back to the random-cost design and/or the lack of reliable, informative cues which could be used for reasoned decisions based on simplified heuristics.…”

Section: Discussionmentioning

confidence: 99%

“…Clearly, such a question is not incentive compatible because the student's pay-off maximizing response may not be to state her true value. Curiously, this simple fact has been overlooked by the most important authorities on CV (see also Flores and Strong, 2007;Schläpfer and Bräuer, 2007).…”

Section: Evidence On Hypothesis 2: Strategic Incentivesmentioning

confidence: 99%

“…The mechanism causing the effect may involve anchoring effects (and/or mental adjustments on incredible costs) that are different across income levels (see Schläpfer, 2006;Flores and Strong, 2007;Schläpfer and Bräuer, 2007). Since anchors in the form of hypothetical cost figures in standard surveys are the same for high and low incomes, the anchoring causes willingness-to-pay values of high and low incomes to converge.…”

Section: Consistency With the Working Hypothesesmentioning

confidence: 99%

“…A promising way to reduce or eliminate strategic answering is thus to keep the presented costs close to the individuals' actual costs if the policy is implemented (Schläpfer, 2006;Schläpfer and Bräuer, 2007). Given respondents with widely different tax bills, this can be achieved by specifying the costs as a percentage (rather than absolute) increase in taxes.…”

Section: Implications Of Hypothesis 2: Bid Design and Incentivesmentioning

confidence: 99%

“…Green et al (1998) show theoretically that stated preference questions about public services can be framed in such ways that if the subjects accept the frame the payoff-maximizing behavior will be to answer truthfully. Schläpfer and Bräuer (2007) conducted field experiments to test if a "potentially" incentive compatible framing as suggested by Green et al (1998) is effective in reducing stated willingness to pay. Their negative results suggest that the scope for purposeful manipulation of respondents' perception of the social choice context through framing (and hence of the potential for strategic answering) may be very limited.…”

mentioning

confidence: 99%

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Contingent valuation: A new perspective

Schläpfer

2008

Ecological Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractAfter several decades of academic research on the contingent valuation (CV) method a consistent behavioral explanation of 'hypothetical bias' is still lacking. Based on evidence from economics, economic psychology and the political sciences, I propose an explanation that is based on two simple working hypotheses about respondent behaviour in contingent valuation surveys. The first hypothesis is that survey respondents are unable to form consistent preferences about unfamiliar goods unless the choice context offers reliable, informative cues that can be rationally exploited in simplified heuristics. The second hypothesis is that the probability and impact of strategic responses in dichotomous-choice questions about public goods depends on the extent to which the presented hypothetical costs differ from the actual costs. The literature on hypothetical bias is revisited in the light of these behavioral hypotheses. I find that the hypotheses are generally supported by the empirical data. Moreover, the hypotheses are able to explain several important empirical phenomena that previous research has not been able to explain. In particular, they solve the puzzle that pre-election polls, but not CV surveys, are able to predict actual referendum outcomes, and they explain why income effects on willingness to pay are lower in CV responses than in actual votes. If confirmed by further studies, the hypotheses will have important implications for future research and practice. First, the hypothetical costs presented in the dichotomous choice question should to be close enough to the actual costs to be credible to all respondents. This can be achieved by specifying the costs as a percentage (rather than absolute) change in taxes. Second, the respondents should be given the option to answer based on information about the positions of large parties and interest groups with known political orientation rather than based on the raw policy information. Theory and evidence suggest that this new survey paradigm largely eliminates the fundamental problems of the conventional stated preference methods.

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