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The “more is less” phenomenon in Contingent and Inferred valuation

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  • Stachtiaris, Spiros
  • Drichoutis, Andreas
  • Klonaris, Stathis

Abstract

We examine inconsistencies in preference orderings of the “more is less” kind (Alevy et al. 2011) using the Contingent valuation (CV) and the Inferred valuation (IV) method (Lusk and Norwood 2009a, 2009b). We find that when moving in a familiar market for consumers (i.e., the food market) we only observe weak effects of inconsistencies. In addition, we find that the IV method is no better than the CV method in generating more consistent preference orderings. Surprisingly, we also find that the IV method generates higher valuations than CV, rendering one of its advantages of mitigating social desirability bias questionable.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29456.

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Date of creation: Mar 2011
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Handle: RePEc:pra:mprapa:29456

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Keywords: willingness-to-pay (WTP); Contingent Valuation (CV); Inferred Valuation(IV); preference reversals;

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References

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  1. Andreas C. Drichoutis & Panagiotis Lazaridis & Rodolfo M. Nayga Jr, 2009. "On Consumers' Valuation Of Nutrition Information," Bulletin of Economic Research, Wiley Blackwell, Wiley Blackwell, vol. 61(3), pages 223-247, 07.
  2. Caswell, Julie A. & Mojduszka, Eliza M., 1996. "Using Informational Labeling To Influence The Market For Quality In Food Products," Working Papers, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance 25989, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  3. Rowe, Robert D. & Schulze, William D. & Breffle, William S., 1996. "A Test for Payment Card Biases," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 178-185, September.
  4. Seidl, Christian, 2002. " Preference Reversal," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 16(5), pages 621-55, December.
  5. Jonathan Alevy & John List & Vic Adamowicz, 2010. "How can behavioral economics inform non-market valuation? An example from the preference reversal literature," Artefactual Field Experiments, The Field Experiments Website 00002, The Field Experiments Website.
  6. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 16(1), pages 67-88, April.
  7. Grether, David M. & Plott, Charles R., . "Economic Theory of Choice and the Preference Reversal Phenomenon," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 152, California Institute of Technology, Division of the Humanities and Social Sciences.
  8. John A. List, 2002. "Preference Reversals of a Different Kind: The "More Is Less" Phenomenon," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1636-1643, December.
  9. Shwarz, Norbert, 1999. "Defensible Preferences and the Public: Commentary on "Measuring Constructed Preferences: Towards a Building Code" by Payne, Bettman and Schkade," Journal of Risk and Uncertainty, Springer, Springer, vol. 19(1-3), pages 271-72, December.
  10. Payne, John W & Bettman, James R & Schkade, David A, 1999. "Measuring Constructed Preferences: Towards a Building Code," Journal of Risk and Uncertainty, Springer, Springer, vol. 19(1-3), pages 243-70, December.
  11. John A. List & Robert P. Berrens & Alok K. Bohara & Joe Kerkvliet, 2004. "Examining the Role of Social Isolation on Stated Preferences," American Economic Review, American Economic Association, American Economic Association, vol. 94(3), pages 741-752, June.
  12. Lusk, Jayson L. & Norwood, F. Bailey, 2009. "Bridging the gap between laboratory experiments and naturally occurring markets: An inferred valuation method," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 236-250, September.
  13. Jayson L. Lusk & F. Bailey Norwood, 2009. "An Inferred Valuation Method," Land Economics, University of Wisconsin Press, vol. 85(3), pages 500-514.
  14. Irwin, Julie R, et al, 1993. " Preference Reversals and the Measurement of Environmental Values," Journal of Risk and Uncertainty, Springer, Springer, vol. 6(1), pages 5-18, January.
  15. Christopher G. Leggett & Naomi S. Kleckner & Kevin J. Boyle & John W. Dufield & Robert Cameron Mitchell, 2003. "Social Desirability Bias in Contingent Valuation Surveys Administered Through In-Person Interviews," Land Economics, University of Wisconsin Press, vol. 79(4), pages 561-575.
  16. Hsee, Christopher K., 1996. "The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 67(3), pages 247-257, September.
  17. Fisher, Robert J, 1993. " Social Desirability Bias and the Validity of Indirect Questioning," Journal of Consumer Research, University of Chicago Press, University of Chicago Press, vol. 20(2), pages 303-15, September.
  18. Gregory, Robin, 1999. "Commentary on "Measuring Constructed Preferences: Towards a Building Code" by Payne, Bettman and Schkade," Journal of Risk and Uncertainty, Springer, Springer, vol. 19(1-3), pages 273-75, December.
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