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Reducing gain-loss asymmetry: A virtual reality choice experiment valuing land use change

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  • Bateman, Ian J.
  • Day, Brett H.
  • Jones, Andrew P.
  • Jude, Simon

Abstract

In the majority of choice experiments (CEs) the attributes of non-market goods are conveyed to respondents as a table of numeric and/or categorical data. Recent research suggests that respondents may have difficulties evaluating data in this format. In the context of a CE eliciting preferences for changes in coastal land use, this study uses a split-sample experiment to compare standard presentations with virtual reality (VR) visualisations conveying objectively identical information. We find that compared to the standard presentation, preferences elicited in VR treatments are less variable and exhibit a significant reduction in asymmetry between willingness to pay (WTP) for gains and willingness to accept (WTA) for corresponding losses. We conjecture that the greater 'evaluability' of the VR presentation reduces respondent judgement error and moderates reliance on the loss-aversion heuristic.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 58 (2009)
Issue (Month): 1 (July)
Pages: 106-118

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Handle: RePEc:eee:jeeman:v:58:y:2009:i:1:p:106-118

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Web page: http://www.elsevier.com/locate/inca/622870

Related research

Keywords: Gain/loss asymmetry Loss aversion Non-market valuation Choice experiments Virtual reality Land use change Coastal zones;

References

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  1. Ian J. Bateman & Ian H. Langford & Alistair Munro & Chris Starmer & Robert Sugden, 2000. "Estimating Four Hicksian Welfare Measures for a Public Good: A Contingent Valuation Investigation," Land Economics, University of Wisconsin Press, vol. 76(3), pages 355-373.
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  10. Fiore, Stephen M. & Harrison, Glenn W. & Hughes, Charles E. & Rutstrm, E. Elisabet, 2009. "Virtual experiments and environmental policy," Journal of Environmental Economics and Management, Elsevier, vol. 57(1), pages 65-86, January.
  11. Magat, Wesley A, et al, 2000. " An Iterative Choice Approach to Valuing Clean Lakes, Rivers, and Streams," Journal of Risk and Uncertainty, Springer, vol. 21(1), pages 7-43, July.
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  15. Bateman, Ian J, et al, 1997. "A Test of the Theory of Reference-Dependent Preferences," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 479-505, May.
  16. Richard Carson & Robert Mitchell & Michael Hanemann & Raymond Kopp & Stanley Presser & Paul Ruud, 2003. "Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(3), pages 257-286, July.
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