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Heterogeneous anchoring in dichotomous choice valuation framework

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Author Info
Emmanuel FLACHAIRE (Paris School of Economics, University of Paris 1)
Guillaume HOLLARD (Paris School of Economics, University of Paris 1, CNRS)
StŽphane LUCHINI (Greqam-Idep-CNRS)

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Abstract

This article addresses the important issue of anchoring in contingent valuation surveys that use the double-bounded elicitation format. Anchoring occurs when responses to the follow-up dichotomous choice valuation question are influenced by the bid presented in the initial dichotomous choice question. Specif”cally, we adapt a theory from psychology to characterize respondents as those who are likely to anchor and those who are not. Using a model developed by Herriges and Shogren (1996). Our method appears successful in discriminating between those who anchor and those who did not. An important resuit is that when controlling for anchoring - and allowing the degree of anchoring to differ between respondent groups - the efficiency of the double-bounded welfare estimate is greater than for the initial dichotomous choice question. This contrasts with earlier research that finds that the potential efficiency gain from the double-bounded questions is lost when anchoring is controlled for and that we are better off not asking follow-up questions

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 2007042.

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Length: 18
Date of creation: 01 Dec 2007
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Handle: RePEc:ctl:louvre:2007042

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Related research
Keywords: Anchoring; contingent valuation; heterogeneity; framing effects;

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Find related papers by JEL classification:
Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Microeconomic Data
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

References listed on IDEAS
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  1. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, 03. [Downloadable!] (restricted)
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  2. Viaud, Jean & Roland-Levy, Christine, 2000. "A positional and representational analysis of consumption. Households when facing debt and credit," Journal of Economic Psychology, Elsevier, vol. 21(4), pages 411-432, August. [Downloadable!] (restricted)
  3. Grether, David M, 1980. "Bayes Rule as a Descriptive Model: The Representativeness Heuristic," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 537-57, November. [Downloadable!] (restricted)
  4. Hanemann, W. Michael, 1985. "Some Issues In Continuous - And Discrete - Response Contingent Valuation Studies," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 14(1), April. [Downloadable!]
  5. 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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