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A Comparison of Induced Value and Home-Grown Value Experiments to Test for Hypothetical Bias in Contingent Valuation

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Author Info

  • James J. Murphy

    ()
    (Department of Economics, University of Alaska Anchorage)

  • Thomas H. Stevens

    ()
    (Department of Resource Economics, University of Massachusetts Amherst)

  • Lava Yadav

    (Department of Resource Economics, University of Massachusetts Amherst)

Abstract

This study tests the hypothesis that hypothetical bias may not be related to value elicitation; rather it may be a value formation problem. When participants are asked to indicate their willingness to pay for an induced value good, we find no evidence of hypothetical bias for three different commodity types (public good, private good, and publicly provided private good). However, when these same subjects are asked to value homegrown goods with no pre-assigned induced value using the same elicitation mechanism, hypothetical values are roughly double actual payments in all three cases. These results support the hypothesis that the process of forming values in a homegrown setting may be a key contributor to hypothetical bias.

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File URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201006.pdf
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Bibliographic Info

Paper provided by University of Alaska Anchorage, Department of Economics in its series Working Papers with number 2010-06.

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Date of creation: Mar 2010
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Publication status: Published in Environmental and Resource Economics, 47(1):111-123
Handle: RePEc:ala:wpaper:2010-06

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Web page: http://www.cbpp.uaa.alaska.edu/CBPPHome/DepartmentsandMajors/Economics.aspx
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Keywords: contingent valuation; hypothetical bias; experiments; induced values; home-grown values;

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  1. Burton, Anthony C. & Carson, Katherine S. & Chilton, Susan M. & Hutchinson, W. George, 2003. "An experimental investigation of explanations for inconsistencies in responses to second offers in double referenda," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 472-489, November.
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Cited by:
  1. Loureiro, Maria L. & Gracia, Azucena & Nayga, Rodolfo M., 2013. "Do experimental auction estimates pass the scope test?," Journal of Economic Psychology, Elsevier, vol. 37(C), pages 7-17.
  2. Eriksson, Stefan & Johansson, Per & Langenskiöld, Sophie, 2012. "What is the right profile for getting a job? A stated choice experiment of the recruitment process," Working Paper Series, Center for Labor Studies 2012:16, Uppsala University, Department of Economics.
  3. Kling, Catherine Louise, 2012. "From Exxon to BP: Has Some Number Become Better than No Number?," Staff General Research Papers 35577, Iowa State University, Department of Economics.
  4. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stephane Luchini, 2009. "A Test Of Cheap Talk In Different Hypothetical Contexts: The Case Of Air Pollution," Working Papers halshs-00382511, HAL.
  5. Jacquemet, Nicolas & Joule, Robert-Vincent & Luchini, Stéphane & Shogren, Jason F., 2011. "Do People Always Pay Less Than They Say? Testbed Laboratory Experiments With IV and HG Values," Economics Papers from University Paris Dauphine 123456789/9717, Paris Dauphine University.
  6. Krawczyk, Michał, 2012. "Testing for hypothetical bias in willingness to support a reforestation program," Journal of Forest Economics, Elsevier, vol. 18(4), pages 282-289.

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