Valuing Environmental Commodities: Some Recent Experiments

Schulze, William D.; d’Arge, Ralph C.; Brookshire, David S.

doi:10.2307/3145783

Cited by 190 publications

(65 citation statements)

References 22 publications

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“…One reason for this was Ž evidence from experiments on public goods Bohm, 1972;Smith, 1979;Bishop et . al., 1983;Schultz et al, 1981 suggesting that strategic misrepresentation was not quantitatively important in stated WTP for public goods. Another was that sequential bidding outcomes were found by some studies to be quite sensitive to Ž .…”

Section: Historical Development Of Contingent Valuation Methodsmentioning

confidence: 99%

Referendum contingent valuation, anchoring, and willingness to pay for public goods

Green

Jacowitz

Kahneman

et al. 1998

Resource and Energy Economics

391

227

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This study reports on experiments that examine anchoring in single referendum questions in contingent valuation surveys on willingness to pay for public goods, and on objective estimation. Strong anchoring effects are found that lead to systematically higher estimated mean responses from YesrNo referendum responses than from open-ended responses. This response pattern is similar for contingent valuation questions and for objective estimation questions. The paper concludes that psychometric anchoring effects, rather than incentive effects, are the likely cause of results commonly found in contingent valuation studies, and that the currently popular single referendum elicitation format is highly vulnerable to anchoring. q 1998 Elsevier Science B.V.

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Section: Historical Development Of Contingent Valuation Methodsmentioning

confidence: 99%

Referendum contingent valuation, anchoring, and willingness to pay for public goods

Green

Jacowitz

Kahneman

et al. 1998

Resource and Energy Economics

391

227

View full text Add to dashboard Cite

show abstract

“…It has consistently been found in contingent valuation studies (e.g. Hammack and Brown, 1974;Freeman, 1979;Rowe et al, 1980;Schulze et al, 1981), one-shot experiments (e.g. Knetsch and Sinden, 1984;Boyce et al, 1992;Bateman et al, 1997), and in repeated market experiments (e.g.…”

mentioning

confidence: 97%

The willingness-to-accept/willingness-to-pay disparity in repeated markets: loss aversion or ‘bad-deal’ aversion?

Isoni

2010

Theory Decis

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Several experimental studies have reported that an otherwise robust regularity -the disparity between Willingness-To-Accept and Willingness-To-Pay -tends to be greatly reduced in repeated markets, posing a serious challenge to existing referencedependent and reference-independent models alike. This paper offers a new account of the evidence, based on the assumptions that individuals are affected by good and bad deals relative to the expected transaction price (price sensitivity), with bad deals having a larger impact on their utility ('bad-deal' aversion). These features of preferences explain the existing evidence better than alternative approaches, including the most recent developments of loss aversion models.Keywords: WTA/WTP disparity, price sensitivity, bad-deal aversion, Vickrey auctions, reference-dependence, loss aversion. JEL classification: D11, D44 1The disparity between the Willingness-To-Accept (WTA) and Willingness-To-Pay (WTP) measures of value has been one of the most widely studied behavioural regularities in the last four decades. The disparity -which has been documented in a large number of contingent valuation and experimental studies 1 -poses serious challenges to Hicksian consumer theory and its applications to welfare economics.While in Hicksian consumer theory WTA and WTP can reasonably be expected to differ only by a few percentage points (Willig, 1976;Randall and Stoll, 1980) many studies have reported differences of much higher orders of magnitude. Such large disparities suggest that indifference curves are not reversible (Knetsch, 1989). They imply that the impact of policies that produce changes in resource allocation cannot be evaluated indifferently using the two measures, and that the resulting welfare changes cannot be approximated by changes in consumer's surplus. If improvements and deteriorations are regarded as highly asymmetrical, the Coase theorem no longer holds. Even in the absence of transaction costs and income effects, the outcome of a negotiation critically depends on the allocation of property rights. Yet, recently, several studies have found that the extent of the disparity is greatly reduced for experienced traders (List, 2003a(List, , 2004 and when agents repeatedly interact in experimental markets (e.g. Shogren et al., 2001;Loomes et al., 2003).Taken at face value, this whole body of evidence poses a theoretical puzzle.On the one hand, the existence and robustness of the disparity in one-off situations seems to indicate that preferences depart from the assumptions of standard consumer theory in systematic ways. This has led to the development of reference-dependent models that incorporate such departures (e.g. Tversky and Kahneman, 1991;Sugden, 2003;Köszegi and Rabin, 2006;Loomes et al., 2009). On the other hand, preferences elicited in experimental markets, in which subjects face feedback, repetition, and incentives, appear sometimes to be compatible with the properties generally assumed in reference-independent economic models. This paper offers a solu...

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“…Although CV traces its lineage to a study by Davis (1964) of hunting in the Maine woods, most current applications stem from the work of Randall, Ives, and Eastman (1974) and the various studies performed at the University of Wyoming (see d ' Arge, Schulze, and Brookshire, 1980;Rowe, d' Arge, and Brookshire, 1980;and Schulze, d' Arge, and Brookshire, 1981; as examples).…”

Section: Overview Of Nonuse CV Literaturementioning

confidence: 99%

Measuring Nonuse Damages Using Contingent Valuation: An Experimental Evaluation of Accuracy

Desvousges¹,

Dunford²,

Boyle³

et al. 2010

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This second edition of Measuring Nonuse Damages Using Conjoint Valuation is essentially a reprint of a 1992 monograph that has been in steady demand since its original appearance. The RTI Press edition, which is intended to meet continued inquiries and requests for the monograph, contains a Foreword and a Preface to the second edition that put the original work into historical perspective. These studies of ways to value stated preferences, as applied then to the Exxon Valdez oil spill, continue to be a timely and still-rigorous examination of such methods; even with the passage of time and statistical advances from the past two decades, the conclusions and insights as to whether and how these techniques might still be employed in valuing use or nonuse losses from similar events remain valid.

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Valuing Environmental Commodities: Some Recent Experiments

Cited by 190 publications

References 22 publications

Referendum contingent valuation, anchoring, and willingness to pay for public goods

Referendum contingent valuation, anchoring, and willingness to pay for public goods

The willingness-to-accept/willingness-to-pay disparity in repeated markets: loss aversion or ‘bad-deal’ aversion?

Measuring Nonuse Damages Using Contingent Valuation: An Experimental Evaluation of Accuracy

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