Abstract
This paper explores two commonly used methods to elicit an individual's willingness to pay (WTP) for a public good in contingent valuation studies. Currently, the most preferred method is the “take-it-or-leave” valuation question, or discrete valuation question (DVQ), where the respondent accepts or rejects a suggested cost for the good. The traditional method, the continuous valuation question (CVQ), simply asks an individual to state his WTP for the suggested change in the provision of a public good like cleaner air. We introduce a simple way to compare the results from these two methods. We also test the anchoring behavior suggested in the psychological literature on choice under uncertainty. The results do not support the anchoring hypothesis, but suggest the hypothesis that people perceive the two tested valuation questions differently.
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I would like to thank Prof. Glenn Harrison, University of South Carolina, Prof. P-O Johansson, Stockholm School of Economics, Prof. Jason Shogren, Iowa State University, and two referees for helpful comments. The usual disclaimer applies.
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Kriström, B. Comparing continuous and discrete contingent valuation questions. Environmental and Resource Economics 3, 63–71 (1993). https://doi.org/10.1007/BF00338320
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DOI: https://doi.org/10.1007/BF00338320