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Induced-Value Tests of Contingent Valuation Elicitation Mechanisms

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Abstract

Using an induced-value experimental design that varies whether values for a “good” are certain or uncertain and whether payment is real or hypothetical, this study investigates issues of demand revelation, hypothetical bias, and value uncertainty for four elicitation mechanisms used in contingent valuation surveys: dichotomous choice, dichotomous choice with follow-up certainty question, payment card, and multiple-bounded discrete choice. For all elicitation mechanisms, we find no evidence of hypothetical bias: voting decisions do not vary systematically when payment is hypothetical versus when it is real. Under all design conditions we find the fewest deviations between stated and induced values and the strongest evidence of demand revelation with dichotomous choice. Stated uncertainty in dichotomous choice follow-up and multiple-bounded discrete choice questions does correlate with uncertain induced values, but the signal is noisy. We discuss the implications of our findings for the design of contingent valuation surveys.

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Acknowledgements

We thank Mary Evans, John List, Greg Poe and seminar participants at Georgia State University for their helpful comments and suggestions. We thank David Bruner and Zach Richards for their research assistance. Research supported by the J. Fred Holly Endowment.

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Authors and Affiliations

  1. Department of Economics, University of Tennessee, 534 Stokely Management Center, Knoxville, TN, 37996-0550, USA

    Christian A. Vossler

  2. Department of Economics, University of Calgary, Calgary, Alberta, T2N 1N4, Canada

    Michael McKee

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  1. Christian A. Vossler
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  2. Michael McKee
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Correspondence to Christian A. Vossler.

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Vossler, C.A., McKee, M. Induced-Value Tests of Contingent Valuation Elicitation Mechanisms. Environ Resource Econ 35, 137–168 (2006). https://doi.org/10.1007/s10640-006-9011-5

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  • DOI: https://doi.org/10.1007/s10640-006-9011-5

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