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Truth in Consequentiality: Theory and Field Evidence on Discrete Choice Experiments

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  • Christian A. Vossler
  • Maurice Doyon
  • Daniel Rondeau

Abstract

This paper explores methodological issues surrounding the use of discrete choice experiments to elicit values for public goods. We develop an explicit game theoretic model of individual decisions, providing conditions under which surveys with a single binary choice question, or sequence of binary choice questions, are incentive-compatible. We complement the theory with a framed field experiment, with treatments that span the spectrum from incentive-compatible, financially binding decisions to decisions with no direct financial consequences. The results suggest truthful preference revelation is possible, provided that participants view their decisions as having more than a weak chance of influencing policy. (JEL C83, C93, H41, Q23)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 4 (2012)
Issue (Month): 4 (November)
Pages: 145-71

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Handle: RePEc:aea:aejmic:v:4:y:2012:i:4:p:145-71

Note: DOI: 10.1257/mic.4.4.145
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References

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  1. Messer, Kent D. & Poe, Gregory L. & Rondeau, Daniel & Schulze, William D. & Vossler, Christian A., 2008. "Social Preferences and Voting: An Exploration Using a Novel Preference Revealing Mechanism," Working Papers 51132, Cornell University, Department of Applied Economics and Management.
  2. Vossler, Christian A. & Evans, Mary F., 2009. "Bridging the gap between the field and the lab: Environmental goods, policy maker input, and consequentiality," Journal of Environmental Economics and Management, Elsevier, vol. 58(3), pages 338-345, November.
  3. Asher A. Blass & Saul Lach & Charles F. Manski, 2008. "Using Elicited Choice Probabilities to Estimate Random Utility Models: Preferences for Electricity Reliability," NBER Working Papers 14451, National Bureau of Economic Research, Inc.
  4. Carson, Richard T & Flores, Nicholas A, 2000. "Contingent Valuation: Controversies and Evidence," University of California at San Diego, Economics Working Paper Series qt75k752s7, Department of Economics, UC San Diego.
  5. Nick Hanley & Robert Wright & Vic Adamowicz, 1998. "Using Choice Experiments to Value the Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 413-428, April.
  6. Jayson L. Lusk & Ted C. Schroeder, 2004. "Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 467-482.
  7. Beggs, S. & Cardell, S. & Hausman, J., 1981. "Assessing the potential demand for electric cars," Journal of Econometrics, Elsevier, vol. 17(1), pages 1-19, September.
  8. List John A. & Sinha Paramita & Taylor Michael H., 2006. "Using Choice Experiments to Value Non-Market Goods and Services: Evidence from Field Experiments," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-39, January.
  9. Cameron, Trudy Ann & Poe, Gregory L. & Ethier, Robert G. & Schulze, William D., 2002. "Alternative Non-market Value-Elicitation Methods: Are the Underlying Preferences the Same?," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 391-425, November.
  10. Laura Taylor & Mark Morrison & Kevin Boyle, 2010. "Exchange Rules and the Incentive Compatibility of Choice Experiments," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 47(2), pages 197-220, October.
  11. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
  12. Wiktor Adamowicz & Peter Boxall & Michael Williams & Jordan Louviere, 1998. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments and Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 64-75.
  13. Carlsson, Fredrik & Johansson-Stenman, Olof, 2010. "Scale factors and hypothetical referenda: A clarifying note," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 286-292, May.
  14. Herriges, Joseph A. & Kling, Catherine L. & Liu, Chih-Chen & Tobias, Justin, 2009. "What Are the Consequences of Consequentiality?," Staff General Research Papers 13034, Iowa State University, Department of Economics.
  15. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1996. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," Land Economics, University of Wisconsin Press, vol. 72(1), pages 80-99.
  16. Takanori Ida & Rei Goto, 2009. "Simultaneous Measurement Of Time And Risk Preferences: Stated Preference Discrete Choice Modeling Analysis Depending On Smoking Behavior," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(4), pages 1169-1182, November.
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Cited by:
  1. Yao, Richard T. & Scarpa, Riccardo & Turner, James A. & Barnard, Tim D. & Rose, John M. & Palma, João H.N. & Harrison, Duncan R., 2014. "Valuing biodiversity enhancement in New Zealand's planted forests: Socioeconomic and spatial determinants of willingness-to-pay," Ecological Economics, Elsevier, vol. 98(C), pages 90-101.
  2. Vossler, Christian A. & Watson, Sharon B., 2013. "Understanding the consequences of consequentiality: Testing the validity of stated preferences in the field," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 137-147.
  3. Daniel R. Petrolia & Matthew G. Interis & Joonghyun Hwang, 2014. "America’s Wetland? A National Survey of Willingness to Pay for Restoration of Louisiana’s Coastal Wetlands," Marine Resource Economics, University of Chicago Press, vol. 29(1), pages 17 - 37.
  4. Timothy C. Haab & Matthew G. Interis & Daniel R. Petrolia & John C. Whitehead, 2013. "From Hopeless to Curious? Thoughts on Hausman’s “Dubious to Hopeless” Critique of Contingent Valuation," Working Papers 13-07, Department of Economics, Appalachian State University.
  5. Baker, Rick & Ruting, Brad, 2014. "Environmental Policy Analysis: A Guide to Non‑Market Valuation," 2014 Conference (58th), February 4-7, 2014, Port Maquarie, Australia 165810, Australian Agricultural and Resource Economics Society.
  6. Czajkowski, Mikołaj & Bartczak, Anna & Giergiczny, Marek & Navrud, Stale & Żylicz, Tomasz, 2014. "Providing preference-based support for forest ecosystem service management," Forest Policy and Economics, Elsevier, vol. 39(C), pages 1-12.
  7. John A. List & Michael K. Price, 2013. "Using Field Experiments in Environmental and Resource Economics," NBER Working Papers 19289, National Bureau of Economic Research, Inc.
  8. Loomis, John B., 2014. "2013WAEA Keynote Address: Strategies for Overcoming Hypothetical Bias in Stated Preference Surveys," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(1), April.
  9. Jones, Luke R. & Cherry, Christopher R. & Vu, Tuan A. & Nguyen, Quang N., 2013. "The effect of incentives and technology on the adoption of electric motorcycles: A stated choice experiment in Vietnam," Transportation Research Part A: Policy and Practice, Elsevier, vol. 57(C), pages 1-11.
  10. Harin, Alexander, 2014. "Problems of utility and prospect theories. A ”certain-uncertain” inconsistency of the random-lottery incentive system," MPRA Paper 55706, University Library of Munich, Germany.
  11. Minjuan Zhao & Robert Johnston & Eric Schultz, 2013. "What to Value and How? Ecological Indicator Choices in Stated Preference Valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(1), pages 3-25, September.
  12. Wiktor Adamowicz & Mark Dickie & Shelby Gerking & Marcella Veronesi & David Zinner, 2013. "Household Decision-Making and Valuation of Environmental Health Risks to Parents and their Children," NCEE Working Paper Series 201306, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Dec 2013.

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