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Heterogeneous anchoring in dichotomous choice valuation framework

  • Emmanuel Flachaire
  • Guillaume Hollard
  • Stéphane Luchini

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. JEL Classification: Q26, C81, D71.

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Article provided by De Boeck Université in its journal Recherches économiques de Louvain.

Volume (Year): 73 (2007)
Issue (Month): 4 ()
Pages: 369-385

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Handle: RePEc:cai:reldbu:rel_734_0369
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  1. 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, vol. 20(2), pages 85-116, June.
  2. 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, vol. 14(1), April.
  3. Grether, David M, 1980. "Bayes Rule as a Descriptive Model: The Representativeness Heuristic," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 537-57, November.
  4. Viaud, Jean & Roland-Levy, Christine, 2000. "A positional and representational analysis of consumption. Households when facing debt and credit," Journal of Economic Psychology, Elsevier, vol. 21(4), pages 411-432, August.
  5. John List, 2004. "Neoclassical theory versus prospect theory: Evidence from the marketplace," Framed Field Experiments 00174, The Field Experiments Website.
  6. 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. 99b06, Universite Aix-Marseille III.
  7. 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, vol. 14(1), April.
  8. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 112-131, January.
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