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Rationality, Tort Reform and Contingent Valuation: A Classroom Experiment in Starting Point Bias

Author

Listed:
  • Victor Matheson

    (Department of Economics, College of the Holy Cross)

Abstract

This simple classroom experiment demonstrates the existence of starting point bias. Asked to place a dollar value on a non-market good such as the loss of a limb or the destruction of a wetland, students place a much smaller value on the loss if a small value is first suggested by the questioner while placing a significantly higher value on the loss when a large value is originally suggested. This experiment can be used in theory classes to demonstrate the limits of individual rationality or in applied classes in law or environmental economics in relation to tort reform or contingent valuation.

Suggested Citation

  • Victor Matheson, 2005. "Rationality, Tort Reform and Contingent Valuation: A Classroom Experiment in Starting Point Bias," Working Papers 0509, College of the Holy Cross, Department of Economics.
    • Handle: RePEc:hcx:wpaper:0509
    as

    Download full text from publisher

    File URL: https://hcapps.holycross.edu/hcs/RePEc/hcx/HC0509-Matheson_StartingPoint.pdf
    File Function: Original version presented at Western Economic Association Meetings, Vancouver, BC, July 2004
    Download Restriction: no
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    More about this item

    Keywords

    starting point bias; contingent valuation; tort reform; classroom experiment; experimental economics;
    All these keywords.

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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