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A Cautionary Note on Tests for Incentive Incompatibility and Starting-Point Bias

Author

Listed:
  • David Aadland
  • Arthur Caplan

Abstract

In a recent study by John Whitehead in 2002 (“Incentive Incompatibility and Starting-Point Bias in Iterative Valuation Questions”), he proposes incentive-incompatibility and starting-point-bias tests for iterative willingness-to-pay questions. We show that if restrictions associated with the nature of starting-point bias are not imposed on the estimation, one obtains inconsistent estimates of the structural parameters and may draw inaccurate conclusions regarding the extent of incentive incompatibility and starting-point bias in contingent-valuation survey data.

Suggested Citation

  • David Aadland & Arthur Caplan, 2003. "A Cautionary Note on Tests for Incentive Incompatibility and Starting-Point Bias," Working Papers 2003-07, Utah State University, Department of Economics.
    • Handle: RePEc:usu:wpaper:2003-07
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    File URL: https://repec.bus.usu.edu/RePEc/usu/pdf/ERI2003-07.pdf
    File Function: First version, 2003
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    More about this item

    Keywords

    Incentive incompatibility; starting-point bias; contingent valuation;
    All these keywords.

    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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