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Modeling Shifts in Willingness to Pay from a Bayesian Updating Perspective

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  • Jeffrey R. Czajkowski
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    Abstract

    This paper derives a structural shift empirical specification for a double-bound dichotomous choice contingent valuation methodology premised upon willingness-to-pay (WTP) shifts ensuing from a representative model of respondent Bayesian updating behavior. We demonstrate by way of data simulations that a traditional structural shift specification may often fail at estimating true WTP in this context. Further simulations demonstrate that a simple extension of the traditional structural shift model derived explicitly from our Bayesian framework can correct for much of the WTP bias, with an empirical application confirming the simulation outcomes. Finally, we investigate the relationship between strategic behavior and WTP shifts.

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    File URL: http://le.uwpress.org/cgi/reprint/85/2/308
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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Land Economics.

    Volume (Year): 85 (2009)
    Issue (Month): 2 ()
    Pages: 308-328

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    Handle: RePEc:uwp:landec:v:85:y:2009:i:2:p:308-328

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    Web page: http://le.uwpress.org/

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    Cited by:
    1. Marcella Veronesi & Anna Alberini & Joseph C. Cooper, 2005. "Detecting Starting Point Bias in Dichotomous-Choice Contingent Valuation Surveys," Working Papers 2005.119, Fondazione Eni Enrico Mattei.
    2. Peterson, Hikaru H. & Bernard, John C. & Fox, John A. (Sean) & Peterson, Jeffrey M., 2013. "Japanese Consumers' Valuation of Rice and Pork from Domestic, U.S., and Other Origins," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(1), April.

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