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Heterogeneous anchoring in dichotomous choice valuation framework

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  • Emmanuel Flachaire

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Guillaume Hollard

    (OEP - Université Paris-Est Marne-la-Vallée (UPEMLV))

  • Stephane Luchini

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - École des Hautes Études en Sciences Sociales (EHESS) - CNRS : UMR6579)

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. Specifically, 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 result 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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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00176056.

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Date of creation: 2007
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Publication status: Published, Recherches Economiques de Louvain, 2007, 73, 4, 369-385
Handle: RePEc:hal:cesptp:halshs-00176056

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00176056
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Keywords: Anchoring; Contingent Valuation; Heterogeneity; Framing effects;

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References

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  1. 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, Northeastern Agricultural and Resource Economics Association, vol. 14(1), April.
  2. Hollard, G. & Luchini, S., 1999. "Theories du choix social et representations: analyse d'une enquete sur le tourisme cert en Camargue," G.R.E.Q.A.M., Universite Aix-Marseille III 99b06, Universite Aix-Marseille III.
  3. John A. List, 2003. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," NBER Working Papers 9736, National Bureau of Economic Research, Inc.
  4. Grether, David M, 1980. "Bayes Rule as a Descriptive Model: The Representativeness Heuristic," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 95(3), pages 537-57, November.
  5. Smith, V. Kerry, 1985. "Some Issues In Discrete Response Contingent Valuation Studies," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, Northeastern Agricultural and Resource Economics Association, vol. 14(1), April.
  6. Green, Donald & Jacowitz, Karen E. & Kahneman, Daniel & McFadden, Daniel, 1998. "Referendum contingent valuation, anchoring, and willingness to pay for public goods," Resource and Energy Economics, Elsevier, Elsevier, vol. 20(2), pages 85-116, June.
  7. Viaud, Jean & Roland-Levy, Christine, 2000. "A positional and representational analysis of consumption. Households when facing debt and credit," Journal of Economic Psychology, Elsevier, Elsevier, vol. 21(4), pages 411-432, August.
  8. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Staff General Research Papers 1501, Iowa State University, Department of Economics.
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Cited by:
  1. repec:hal:journl:halshs-00584247 is not listed on IDEAS
  2. Stephane Luchini & Verity Watson, 2008. "Does respondent uncertainty explain framing effects in double bounded contingent valuation?," Working Papers halshs-00285861, HAL.
  3. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stéphane Luchini, 2011. "A Test of Cheap Talk in Different Hypothetical Contexts: The Case of Air Pollution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 50(1), pages 111-130, September.
  4. repec:hal:journl:halshs-00462193 is not listed on IDEAS
  5. Nicolas Jacquemet & Alexander James & Stephane Luchini & Jason Shogren, 2011. "Social psychology and environmental economics: a new look at ex ante corrections of biased preference evaluation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00584247, HAL.
  6. Michaël Schwarzinger & Fabrice Carrat & Stéphane Luchini, 2009. ""If you have the flu symptoms, your asymptomatic spouse may better answer the willingness-to-pay question". Evidence from a double-bounded dichotomous choice model with heterogeneous anchori," Post-Print inserm-00636179, HAL.
  7. Schwarzinger, Michaël & Carrat, Fabrice & Luchini, Stéphane, 2009. ""If you have the flu symptoms, your asymptomatic spouse may better answer the willingness-to-pay question": Evidence from a double-bounded dichotomous choice model with heterogeneous anchori," Journal of Health Economics, Elsevier, Elsevier, vol. 28(4), pages 873-884, July.

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