Identifying the True Willingness-To-Pay of Bayesian Respondents in a Dichotomous Choice Contingent Valuation Methodology
AbstractThis paper develops a respondent model of Bayesian updating for a double-bound dichotomous choice (DB-DC) contingent valuation methodology. We demonstrate by way of data simulations that current DB-DC identifications of true willingness-to-pay (WTP) may often fail given this respondent Bayesian updating context. Further simulations demonstrate that a simple extension of current DB-DC identifications derived explicitly from our Bayesian updating behavioral model can correct for much of the WTP bias. Additional results provide some caution to viewing respondents as acting strategically toward the second bid. Finally, an empirical application confirms the simulation outcomes.
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Bibliographic InfoPaper provided by Florida International University, Department of Economics in its series Working Papers with number 0606.
Length: 35 pages
Date of creation: Jun 2006
Date of revision:
Bayesian updating; contingent valuation; double-bound dichotomous choice; strategic behavior; willingness-to-pay;
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
- Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-17 (All new papers)
- NEP-DCM-2006-06-17 (Discrete Choice Models)
- NEP-ECM-2006-06-17 (Econometrics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Staff General Research Papers
1501, Iowa State University, Department of Economics.
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