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One-and-One-Half-Bound Dichotomous Choice Contingent Valuation

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Author Info
Joseph C. Cooper (Economic Research Service, USDA)
Michael Hanemann (University of California, Berkeley)
Giovanni Signorello (degli Studi di Catania)

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Abstract

Although the double-bound (DB) format for the discrete choice contingent valuation method (CVM) has the benefit of higher efficiency in welfare benefit estimates than the single-bound (SB) discrete choice CVM, it has been subject to criticism due to evidence that some of the responses to the second bid may be inconsistent with the responses to the first bid. As a means to reduce the potential for response bias on the follow-up bid in multiple-bound discrete choice formats such as the DB model while maintaining much of the efficiency gains of the multiple-bound approach, we introduce the one-and-one-half-bound (OOHB) approach and present a real-world application. In a laboratory setting, despite the fact that the OOHB model uses less information than the DB approach, the efficiency gains in moving from SB to OOHB capture a large portion of the gain associated with moving from SB to DB. Utilizing distribution-free seminonparametric estimation techniques on a split-survey data set, our OOHB estimates demonstrated higher consistency with respect to the follow-up data than the DB estimates and were more efficient as well. Hence, OOHB may serve as a viable alternative to the DB format in situations where follow-up response bias may be a concern. Copyright (c) 2002 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 84 (2002)
Issue (Month): 4 (07)
Pages: 742-750
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Handle: RePEc:tpr:restat:v:84:y:2002:i:4:p:742-750

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  1. Rauli Svento, 1993. "Some notes on trichotomous choice discrete valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(6), pages 533-543, December. [Downloadable!] (restricted)
  2. Carson, R.T. & Mitchell, R.C. & Hanemann, W.M. & Kopp, R.J. & Presser, S. & Ruud, P.A., 1992. "A Contingent Valuation Study of Lost Passive Use Values Resulting From the Exxon Valdez Oil Spill," MPRA Paper 6984, University Library of Munich, Germany. [Downloadable!]
  3. Gallant, A. Ronald, 1982. "Unbiased determination of production technologies," Journal of Econometrics, Elsevier, vol. 20(2), pages 285-323, November. [Downloadable!] (restricted)
  4. Trudy Ann Cameron & John Quiggin, 1992. "Estimation Using Contingent Valuation Data From a "Dichotomous Choice with Follow-Up" Questionnaire," UCLA Economics Working Papers 653, UCLA Department of Economics. [Downloadable!]
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  5. Kanninen Barbara J., 1995. "Bias in Discrete Response Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 114-125, January. [Downloadable!] (restricted)
  6. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 112-131, January. [Downloadable!] (restricted)
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  7. Deacon, Robert T & Shapiro, Perry, 1975. "Private Preference for Collective Goods Revealed Through Voting on Referenda," American Economic Review, American Economic Association, vol. 65(5), pages 943-55, December. [Downloadable!] (restricted)
  8. Cooper Joseph C., 1993. "Optimal Bid Selection for Dichotomous Choice Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 25-40, January. [Downloadable!] (restricted)
  9. Creel, Michael & Loomis, John, 1997. "Semi-nonparametric Distribution-Free Dichotomous Choice Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 32(3), pages 341-358, March. [Downloadable!] (restricted)
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  1. M. Genius & Elisabetta Strazzera, 2005. "Modeling Elicitation effects in contingent valuation studies: a Monte Carlo Analysis of the bivariate approach," Working Paper CRENoS 200502, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
  2. Cho, Seong-Hoon & Yen, Steven T. & Bowker, J.M. & Newman, David H., 2008. "Modeling Willingness to Pay for Land Conservation Easements: Treatment of Zero and Protest Bids and Application and Policy Implications," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), April. [Downloadable!]
  3. Alok Anand & Ron Mittelhammer & Jill McCluskey, 2007. "Consumer Response to Information and Second-Generation Genetically Modified Food in India," Journal of Agricultural & Food Industrial Organization, Berkeley Electronic Press, vol. 5(1), pages 1138-1138. [Downloadable!] (restricted)
  4. Jesús Barreiro & Mercedes Sánchez & Montserrat Viladrich-Grau, 2005. "How much are people willing to pay for silence? A contingent valuation study," Applied Economics, Taylor and Francis Journals, vol. 37(11), pages 1233-1246, June. [Downloadable!] (restricted)
  5. Neil A. Powe & Kenneth G. Willis & Guy G. Garrod, 2006. "Difficulties in valuing street light improvement: trust, surprise and bound effects," Applied Economics, Taylor and Francis Journals, vol. 38(4), pages 371-381, March. [Downloadable!] (restricted)
  6. Jose Luis Pinto-Prades & Veronica Farreras & Jaime Fernández de Bobadilla, 2006. "Willingness to pay for a reduction in the mortality risk after a myocardial infarction: an aplication of the contingent valuation method to the case of eplerenone," Working Papers 06.17, Universidad Pablo de Olavide, Department of Economics. [Downloadable!]
  7. Sutton, William R. & Larson, Douglas M. & Jarvis, Lovell S., 2004. "A New Approach For Assessing The Costs Of Living With Wildlife In Developing Countries," Working Papers 11951, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  8. Jorge Araña & Carmelo León, 2007. "Repeated Dichotomous Choice Formats for Elicitation of Willingness to Pay: Simultaneous Estimation and Anchoring Effect," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 36(4), pages 475-497, April. [Downloadable!] (restricted)
  9. Bateman, Ian J. & Day, Brett H. & Dupont, Diane P. & Georgiou, Stavros, 2006. "Incentive compatibility and procedural invariance testing of the one-and-one-half-bound dichotomous choice elicitation method: distinguishing strategic behaviour from the anchoring heuristic," 2006 Annual meeting, July 23-26, Long Beach, CA 21104, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  10. Jose-Luis Pinto-Prades & Veronica Farreras & Jaime de Bobadilla, 2008. "Willingness to pay for a reduction in mortality risk after a myocardial infarction: an application of the contingent valuation method to the case of eplerenone," The European Journal of Health Economics, Springer, vol. 9(1), pages 69-78, February. [Downloadable!] (restricted)
  11. Xue, Hong & Mainville, Denise & You, Wen & Nayga, Rodolfo M. Jr., 2009. "Nutrition Knowledge, Sensory Characteristics and Consumers’ Willingness to Pay for Pasture-Fed Beef," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49277, Agricultural and Applied Economics Association. [Downloadable!]
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