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The Adding-Up Test in an Incentivized Value Elicitation Mechanism: The Role of the Income Effect

Author

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  • Levan Elbakidze

    (West Virginia University)

  • Rodolfo M. Nayga

    (University of Arkansas
    Norwegian Institute of Bioeconomy Research
    NBER)

Abstract

In the context of testing the construct validity of stated preference studies, some researchers advocate the use of an “adding-up test” designed to gauge whether elicited values are sufficiently sensitive to a change in the scope (i.e. size) of a good. Crucial to the applicability of this test in practice, which relies on endowing a subsample of respondents with a good free of charge, is that the income effects due to endowment are negligible. In this study, we apply the adding-up test in an experimental value elicitation format to examine the potential effect of endowment as part of the test design on the adding-up property of elicited values. The results show that the adding-up property can be affected by free provision of part of the bundle.

Suggested Citation

  • Levan Elbakidze & Rodolfo M. Nayga, 2018. "The Adding-Up Test in an Incentivized Value Elicitation Mechanism: The Role of the Income Effect," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 625-644, November.
    • Handle: RePEc:kap:enreec:v:71:y:2018:i:3:d:10.1007_s10640-017-0177-9
    DOI: 10.1007/s10640-017-0177-9
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    Cited by:

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