A Comparison of Induced Value and Home-Grown Value Experiments to Test for Hypothetical Bias in Contingent Valuation

Murphy, James J.; Stevens, Thomas H.; Yadav, Lava

doi:10.1007/s10640-010-9367-4

Cited by 35 publications

(28 citation statements)

References 42 publications

(47 reference statements)

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“…Among them, either the PC or MBDC format, which presents all of possible WTA values to respondents, would produce an unnecessary hypothetical bias due to the fact that people always have an incentive to choose a value that is more than he or she actually accepts [28,55]. With respect to the OE format, respondents should have the ability to estimate services or goods they provided, otherwise they have to leave the question blank or provide inaccurate answers resulting in information bias [56].…”

Section: Elicitation Formatmentioning

confidence: 99%

“…As mentioned above, there are likely to be disparities or so-called hypothetical bias between eliciting and real WTA [55]. In order to minimize the bias and to fully simulate the real market, the study team conducted a pre-survey of 30 households in the area and talked with stakeholder-focus groups (e.g., government officials, village head).…”

Section: Measures Of Bias Controlmentioning

confidence: 99%

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Estimation of Rural Households’ Willingness to Accept Two PES Programs and Their Service Valuation in the Miyun Reservoir Catchment, China

Yang

Zhang

et al. 2018

Sustainability

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Abstract:As the only surface water source for Beijing, the Miyun Reservoir and its catchment (MRC) are a focus for concern about the degradation of ecosystem services (ES) unless appropriate payments for ecosystem services (PES) are in place. This study used the contingent valuation method (CVM) to estimate the costs of two new PES programs, for agriculture and forestry, and to further calculate the economic value of ES in the MRC from the perspective of local rural households' willingness to accept (WTA). The results of Logit model including WTA and the variables of household and village indicate that the local socio-economic context has complex effects on the WTA of rural households. In particular, the bid amount, location and proportion of off-farm employment would have significant positive effects on the local WTA. In contrast, the insignificance of the PES participation variable suggests that previous PES program experiences may negatively impact subsequent program participation. The mean WTA payments for agriculture and forestry PES programs were estimated as 8531 and 8187 yuan/ha/year, respectively. These results consistently explain the differentiated opportunity costs on both farmland and forestry land. Meanwhile, the differentiated WTA values in Beijing vs. the surrounding Hebei Province follow the interest differences and development gaps between jurisdictions. Finally, the total economic value of ES in the MRC area was estimated at 11.1 billion yuan/year). The rational economic value of ES for the restoration priority areas reaches 515.2 million yuan/year. For the existing budget gap (299 million yuan/year), the study proposed that decision makers increase the water tariff by 0.08 yuan to raise the funds needed. The study also concluded that these results are not only financially and politically feasible but also cost-effective. This study has policy implications for improving the implementation efficiency and providing quantified supports for PES programs in megacity source water area.

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Section: Elicitation Formatmentioning

confidence: 99%

Section: Measures Of Bias Controlmentioning

confidence: 99%

Estimation of Rural Households’ Willingness to Accept Two PES Programs and Their Service Valuation in the Miyun Reservoir Catchment, China

Yang

Zhang

et al. 2018

Sustainability

View full text Add to dashboard Cite

show abstract

“…The related method of contingent valuation has been severely criticized based on these arguments (Carson et al 1996;Hausman 2012). However, a number of methods for reducing this bias have been suggested in the literature (List 2001;Murphy et al 2005;Carson 2012;Kling et al 2012), and several recent studies show that stated and revealed preferences often coincide (Murphy et al 2010;Jacquemet et al 2011). The results in these studies suggest that the importance of hypothetical bias depends on the experimental setting (Taylor et al 2001); the hypothetical valuation of a good is likely to exceed its actual valuation in situations which involve an important perceived ethical dimension and where a high value is considered 'ethically commendable', but not in other situations (Ajzen et al 2004;Guzman and Kolstad 2007).…”

Section: Validitymentioning

confidence: 99%

What is the right profile for getting a job? A stated choice experiment of the recruitment process

2016

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We study the recruitment behaviour of Swedish employers using data from a stated choice experiment. In the experiment, the employers are first asked to describe an employee who recently and voluntarily left the firm and then to choose between two hypothetical applicants to invite to a job interview or to hire as a replacement for their previous employee. The two applicants differ with respect to characteristics such as gender, age, education, work experience, ethnicity, religious beliefs, family situation, weight, and health, but otherwise have similar characteristics as the previous employee. Our results show that employers prefer not to recruit applicants who are old, nonEuropean, Muslim, Jewish, obese, have several children, or have a history of sickness absence. We also calculate the reduction in wage costs needed to make employers indifferent between applicants with and without these characteristics, and find that wage costs would have to be reduced by up to 50 % for applicants with some characteristics.

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“…are chosen from a price list (Vossler and McKee, 2006;Murphy et al, 2010), although the use of a coarse grid of possible valuations does not provide narrowly-defined valuation estimates and thus a relatively weak test. Some studies have "trained" subjects on its revelation incentives using objects of known, objective value before using it to value things of interest (e.g., lotteries, products), e.g., Noussair et al (2004a;2004b).…”

Section: Figure 2: Decision Form Used In Both Roundsmentioning

confidence: 99%

Misconceptions and Game Form Recognition of the BDM Method: Challenges to Theories of Revealed Preference and Framing

Cason¹,

Plott

2012

SSRN Journal

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This study reports a simple experiment using induced-value items to assess the accuracy of the Becker, DeGroot, Marschak (BDM) method (1964 Behavioral Science) for measuring preferences. Although the BDM mechanism is incentive compatible the data indicate that it can be empirically unreliable due to susceptibility to subject misconceptions about the game form. The resulting choices appear to reflect preferences constructed through a framing process, but further analysis reveals types of misconceptions through specific patterns of behavior. The data are more consistent with a hypothesis that the choices represent mistakes, such as a misconception that the BDM is a first-price auction mechanism. This highlights that preferences should be considered as distinct from choices unless misconceptions are eliminated. Neglecting misconceptions and related mistakes can lead the theory of framing and the theory of revealed preference to result in incorrect interpretations of data. Keywords: Preference Elicitation; Misconceptions; Reference Dependence; Endowment Effect JEL codes: C8, C9For helpful comments we thank Gary Charness, Vincent Crawford, David Grether, David Levine, Vai-Lam Mui, Anmol Ratan, Matthew Shum, Charles Sprenger, Kathryn Zeiler, and presentation audiences at UC Santa Barbara, USC, Purdue, and ESA, and SAET conferences. We retain responsibility for our interpretation and for any mistakes or misconceptions. ‡ Economics Department, Krannert School of Management, Purdue University 100 S. Grant Street, West Lafayette, IN 47907-2076 While the BDM is a very powerful tool, inconsistencies of preference measurement across different versions of the method and other techniques for eliciting preferences suggest that the methodology itself should be examined. The reliability and use of the BDM is closely related to a fundamental controversy about the properties of preferences, which is the focus of this paper.The controversy has on the one hand the theory of revealed preference, which rests on the hypothesis that individuals have preferences over outcomes and those preferences are independent of the feasible set of outcomes. On the other hand, the theory of framing holds that preferences are dependent on and perhaps even constructed from the context faced by the individual and might have no particular existence outside that context. 1This study provides evidence that the widely-used BDM mechanism is a problematic measurement tool, leading to a reinterpretation of this controversy because many choices reflect mistakes rather than preferences.Any pattern of choices can be described as having been produced by some form of preference if the set of admissible preferences is sufficiently rich. For any choice, one can imagine a preference that could have produced it, suggesting that the theory of preference is not falsifiable. The theory of revealed preference was created to explore this issue. Over the decades, this theory has evolved to isolate various features of preference consistency together with tests that ca...

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A Comparison of Induced Value and Home-Grown Value Experiments to Test for Hypothetical Bias in Contingent Valuation

Cited by 35 publications

References 42 publications

Estimation of Rural Households’ Willingness to Accept Two PES Programs and Their Service Valuation in the Miyun Reservoir Catchment, China

Estimation of Rural Households’ Willingness to Accept Two PES Programs and Their Service Valuation in the Miyun Reservoir Catchment, China

What is the right profile for getting a job? A stated choice experiment of the recruitment process

Misconceptions and Game Form Recognition of the BDM Method: Challenges to Theories of Revealed Preference and Framing

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