Conservative dichotomous choice responses in the active policy setting: DC rejections below WTP
- 77 Downloads
An important feature of a Contingent Value (CV) study is that researchers design a survey that guides respondents to answer dichotomous choice (DC) questions as if they represent once-and-for-all choices. Researchers frequently construct hypothetical markets to satisfy this condition; yet detractors assert that ‘hypotheticality’ leads inevitably to inflated DC responses. For active policy questions, however, some respondents may suspect that a CV informs an actual policy issue; so to reject a DC might induce the policy-maker to reintroduce the policy with a price reduction or a program improvement. With potential incentives to deflate a DC response when policies are active, we locate two types of respondents that represent two different incentives. One class is expected to be able to risk permanent rejection of a waiver from one automobile emissions inspection. This class more frequently rejects a DC value known to improve existing conditions. Another respondent class is expected to be risk averse to defeat of the program or to excessive delay. Predictably, these respondents more frequently accept a DC value that represents a known gain. Conservative DC responses have implications for the use of CV in active policy contexts, opening a role for theory to assist practitioners in these circumstances.
KeywordsContingent valuation Referendum incentives Multinomial logit
JEL ClassificationC25 D78 Q58
Unable to display preview. Download preview PDF.
- Alberini A, Veronesi M, Cooper JC (2005) Detecting starting point bias in dichotomous-choice contingent valuation surveys. FEEM Working Paper No. 119.05Google Scholar
- Ash M, Murphy JJ, Stevens TH (2004) Hypothetical bias in dichotomous choice contingent value studies. University of Massachusetts Resource Economics Working Paper No. 2004–9Google Scholar
- Cummings R, Harrison G, Ruström E (1995) Homegrown values and hypothetical surveys: is the dichotomous choice approach incentive-compatible?. Am Econ Rev 85(1):260–266Google Scholar
- Fischhoff B, (1982) Debiasing. In: Kahneman, D., Slovic, P. and Tversky, A. Judgment under uncertainty. Cambridge University Press, New York: pp 422–444Google Scholar
- Hensher, DA, Greene, WH (2001) The mixed logit model: the state of practice and warnings for the unwary. Working paper. Institute of Transport Studies, The University of SydneyGoogle Scholar
- Louviere JJ, Hensher DA, Swait JF (2000) Stated choice methods and analysis. Cambridge University Press, Cambridge, MAGoogle Scholar
- McFadden D, Kahneman D (1995) Referendum contingent values, anchoring and willingness to pay for public goods. Working paper. Department of Economics, UC-BerkeleyGoogle Scholar
- Murphy JJ, Stevens TH (2004) Contingent valuation, hypothetical bias and Experimental Economics. Agric Nat Resour Rev 33(2):182–192Google Scholar
- Train K (2003) Discrete choice methods with simulation. Cambridge University Press, Cambridge, MAGoogle Scholar
- US Bureau of Labor Statistics (2000) Installation, maintenance, and repair occupations: automotive service technicians and mechanics. 2000 state occupational employment and wage estimates: Georgia. Occupational Employment Statistics, Washington, DCGoogle Scholar