Environmental and Resource Economics

, Volume 47, Issue 1, pp 111–123 | Cite as

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

Article

Abstract

This study tests the hypothesis that hypothetical bias may not be related to value elicitation; rather it may be a value formation problem. When participants are asked to indicate their willingness to pay for an induced value good, we find no evidence of hypothetical bias for three different commodity types (public good, private good, and publicly provided private good). However, when these same subjects are asked to value homegrown goods with no pre-assigned induced value using the same elicitation mechanism, hypothetical values are roughly double actual payments in all three cases. These results support the hypothesis that the process of forming values in a homegrown setting may be a key contributor to hypothetical bias.

Keywords

Contingent valuation Hypothetical bias Experiments Induced values Home-grown values 

JEL Classification

C91 H41 Q26 Q28 

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Copyright information

© Springer Science+Business Media B.V. 2010

Authors and Affiliations

  • James J. Murphy
    • 1
    • 2
  • Thomas H. Stevens
    • 2
  • Lava Yadav
    • 2
  1. 1.Department of EconomicsUniversity of Alaska AnchorageAnchorageUSA
  2. 2.Department of Resource EconomicsUniversity of Massachusetts-AmherstAmherstUSA

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