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Certainty calibration in contingent valuation - exploring the within-difference between dichotomous choice and open-ended answers as a certainty measure

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Author Info
Sund, Björn () (Department of Business, Economics, Statistics and Informatics)
Abstract

Hypothetical bias is a serious problem of stated preference techniques. The certainty approach calibrates answers by assessing different weights to remedy respondents’ valuation. However, very little research has been done to find a link between economic theory and empirical treatment of uncertainty through certainty calibration. We use a combination of dichotomous choice (DC) followed by an open-ended (OE) question to examine the relation between the degree of confidence and the distance between the DC bid and the OE answer. The results show that the OE bid difference is significantly correlated to the certainty level in one of our two contingent valuation (CV) surveys, with the probability of stating the highest confidence value increasing between 5-19 percent per SEK 1000 (~$170/€106) that the answer to the OE question and the bid differ. The second CV survey shows a significant relation for the no-responders.

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Publisher Info
Paper provided by Örebro University, Swedish Business School in its series Working Papers with number 2009:1.

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Length: 40 pages
Date of creation: 03 Feb 2009
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Handle: RePEc:hhs:oruesi:2009_001

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Related research
Keywords: Contingent valuation; Hypothetical bias; Calibration; Certainty approach; Value of a statistical life; Traffic safety; Cardiac arrest;

Find related papers by JEL classification:
H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
R41 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Transportation: Demand, Supply, and Congestion

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References listed on IDEAS
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