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Virtual experiments and environmental policy

Author

Listed:
  • Fiore, Stephen M.
  • Harrison, Glenn W.
  • Hughes, Charles E.
  • Rutstrm, E. Elisabet

Abstract

We develop the concept of virtual experiments and consider their application to environmental policy. A virtual experiment combines insights from virtual reality in computer science, naturalistic decision-making from psychology, and field experiments from economics. The environmental policy applications of interest to us are the valuation of wild fire management policies such as prescribed burn. The methodological objective of virtual experiments is to bridge the gap between the artefactual controls of laboratory experiments and the naturalistic domain of field experiments or direct field studies. This should provide tools for policy analysis that combine the inferential power of replicable experimental treatments with the natural "look and feel" of a field domain. We present data from an experiment comparing valuations elicited by virtual experiments to those elicited by instruments that have some of the characteristics of standard survey instruments, and conclude that responses in the former reflect beliefs that are closer to the truth.

Suggested Citation

  • Fiore, Stephen M. & Harrison, Glenn W. & Hughes, Charles E. & Rutstrm, E. Elisabet, 2009. "Virtual experiments and environmental policy," Journal of Environmental Economics and Management, Elsevier, vol. 57(1), pages 65-86, January.
  • Handle: RePEc:eee:jeeman:v:57:y:2009:i:1:p:65-86
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    References listed on IDEAS

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    1. Loomis, John B. & Le, Hung Trong & Gonzales-Caban, Armando, 2005. "Testing transferability of willingness to pay for forest fire prevention among three states of California, Florida and Montana," Journal of Forest Economics, Elsevier, vol. 11(3), pages 125-140, December.
    2. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December.
    3. Edward Castronova, 2004. "The Price of Bodies: A Hedonic Pricing Model of Avatar Attributes in a Synthetic World," Kyklos, Wiley Blackwell, vol. 57(2), pages 173-196, May.
    4. Steffen Andersen & Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2008. "Eliciting Risk and Time Preferences," Econometrica, Econometric Society, vol. 76(3), pages 583-618, May.
    5. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
    6. Hey, John D & Orme, Chris, 1994. "Investigating Generalizations of Expected Utility Theory Using Experimental Data," Econometrica, Econometric Society, vol. 62(6), pages 1291-1326, November.
    7. GlennW. Harrison & JohnA. List, 2008. "Naturally Occurring Markets and Exogenous Laboratory Experiments: A Case Study of the Winner's Curse," Economic Journal, Royal Economic Society, vol. 118(528), pages 822-843, April.
    8. Richard T. Carson & W. Michael Hanemann & Raymond J. Kopp & Jon A. Krosnick & Robert Cameron Mitchell & Stanley Presser, 1998. "Referendum Design and Contingent Valuation: The NOAA Panel's No-Vote Recommendation," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 335-338, May.
    9. Steffen Anderson & Glenn Harrison & Morten Lau & Rutstrom Elisabet, 2007. "Valuation using multiple price list formats," Applied Economics, Taylor & Francis Journals, vol. 39(6), pages 675-682.
    10. Cameron,A. Colin & Trivedi,Pravin K., 2008. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9787111235767, April.
    11. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    12. John B. Loomis & Lucas S. Bair & Armando González-Cabán, 2002. "Language-Related Differences in a Contingent Valuation Study: English Versus Spanish," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1091-1102.
    13. Glenn Harrison, 2005. "Field experiments and control," Artefactual Field Experiments 00057, The Field Experiments Website.
    14. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
    15. Glenn W. Harrison & Eric Johnson & Melayne M. McInnes & E. Elisabet Rutström, 2005. "Risk Aversion and Incentive Effects: Comment," American Economic Review, American Economic Association, vol. 95(3), pages 897-901, June.
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