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Preference Elicitation Methods and Valuation Implications: Experimental Evidence from Valuation and Purchase of Water Quality Credits

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  • Liu, Pengfei
  • Swallow, Stephen

Abstract

This paper compares different preference elicitation methods used in choice ex- periments. We implemented four different methods to elicit individuals’ preference for a non-market good. Our four treatments include (1) a hypothetical referen- dum, (2) a real referendum lacking incentive compatibility, (3) a real choice with incentive compatibility and (4) a hybrid approach that combines (2) and (3). We develop a method to estimate the percentage of strategic choices in each treatment. We find that in the hypothetical referendum, about 75% to 92% individuals truth- fully reveal their preference and choose the option that gives the highest utility in a choice question. Adding policy consequentiality (e.g., the real referendum) and payment consequentiality (e.g., the hybrid approach) could increase the percentage of individuals truthfully reveal their preference.

Suggested Citation

  • Liu, Pengfei & Swallow, Stephen, 2016. "Preference Elicitation Methods and Valuation Implications: Experimental Evidence from Valuation and Purchase of Water Quality Credits," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236209, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:236209
    DOI: 10.22004/ag.econ.236209
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    Keywords

    Environmental Economics and Policy; Institutional and Behavioral Economics; Land Economics/Use; Public Economics; Resource /Energy Economics and Policy;
    All these keywords.

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