IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Repeated Dichotomous Choice Formats for Elicitation of Willingness to Pay: Simultaneous Estimation and Anchoring Effect

  • Jorge Araña

    ()

  • Carmelo León

    ()

Repeated dichotomous choice contingent valuation data are generated from responses to a succession of binary questions regarding alternative prices for an environmental good. In this paper we propose a simultaneous equation model that allows for endogeneity and error correlation across the responses at each stage of the bidding process. The model allows us to study the evolution of anchoring effects after the second dichotomous choice question. Estimation involves the Bayesian techniques of Gibbs sampling and data augmentation, and the application focuses on the preservation value of a natural area. The results for a data set involving up to four successive dichotomous choice questions show that restricted multiple-bounded models are rejected by the data with the general model. In addition, willingness to pay tends to stabilize after the second stage in the elicitation process for the general unrestricted model. When taking anchoring effects into consideration, it is revealed that individuals’ responses in the latter stages are influenced by the sequence of bid prices offered in earlier questions. Nevertheless, they do not have a significant effect on welfare estimates. Copyright Springer Science+Business Media, Inc. 2007

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hdl.handle.net/10.1007/s10640-006-9038-7
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 36 (2007)
Issue (Month): 4 (April)
Pages: 475-497

as
in new window

Handle: RePEc:kap:enreec:v:36:y:2007:i:4:p:475-497
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100263

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Ian Langford & Ian Bateman & Hugh Langford, 1996. "A multilevel modelling approach to triple-bounded dichotomous choice contingent valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(3), pages 197-211, April.
  2. Carmen Fernandez & Carmelo J. Leon & Mark F.J. Steel & Francisco Jose Vazquez-Polo, 2004. "Bayesian Analysis of Interval Data Contingent Valuation Models and Pricing Policies," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 431-442, October.
  3. Koop, Gary & Tole, Lise, 2004. "Measuring the health effects of air pollution: to what extent can we really say that people are dying from bad air?," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 30-54, January.
  4. Cooper, Joseph C. & Hanemann, W. Michael & Signorello, Giovanni, 2001. "One-and-One-Half Bound Dichotomous Choice Contingent Valuation," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt09c663b2, Department of Agricultural & Resource Economics, UC Berkeley.
  5. Arana, Jorge E. & Leon, Carmelo J., 2005. "Flexible mixture distribution modeling of dichotomous choice contingent valuation with heterogenity," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 170-188, July.
  6. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
  7. Bateman, Ian J. & Langford, Ian H. & Jones, Andrew P. & Kerr, Geoffrey N., 2001. "Bound and path effects in double and triple bounded dichotomous choice contingent valuation," Resource and Energy Economics, Elsevier, vol. 23(3), pages 191-213, July.
  8. Tversky, Amos & Slovic, Paul & Kahneman, Daniel, 1990. "The Causes of Preference Reversal," American Economic Review, American Economic Association, vol. 80(1), pages 204-17, March.
  9. Grether, David M & Plott, Charles R, 1979. "Economic Theory of Choice and the Preference Reversal Phenomenon," American Economic Review, American Economic Association, vol. 69(4), pages 623-38, September.
  10. Cameron, Trudy Ann & Quiggin, John, 1998. "Estimation Using Contingent Valuation Data from a "Dichotomous Choice with Follow-Up" Questionnaire: Reply," Journal of Environmental Economics and Management, Elsevier, vol. 35(2), pages 195-199, March.
  11. David Layton & S. Lee, 2006. "Embracing Model Uncertainty: Strategies for Response Pooling and Model Averaging," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 51-85, 05.
  12. Cameron Trudy Ann & Quiggin John, 1994. "Estimation Using Contingent Valuation Data from a Dichotomous Choice with Follow-Up Questionnaire," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 218-234, November.
  13. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Staff General Research Papers 1501, Iowa State University, Department of Economics.
  14. Huber, Joel & Train, Kenneth, 2000. "On the Similarity of Classical and Bayesian Estimates of Individual Mean Partworths," Department of Economics, Working Paper Series qt7zm4f51b, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  15. George Hutchinson & Ian Bateman & Diane Burgess & David I. Matthews, 2004. "Learning Effects In Repeated Dichotomous Choice Contingent Valuation Questions," Royal Economic Society Annual Conference 2004 59, Royal Economic Society.
  16. Blundell, Richard & Smith, Richard J., 1994. "Coherency and estimation in simultaneous models with censored or qualitative dependent variables," Journal of Econometrics, Elsevier, vol. 64(1-2), pages 355-373.
  17. John C. Whitehead, 2002. "Incentive Incompatibility and Starting-Point Bias in Iterative Valuation Questions," Land Economics, University of Wisconsin Press, vol. 78(2), pages 285-297.
  18. Dan Rigby & Mike Burton, 2006. "Modeling Disinterest and Dislike: A Bounded Bayesian Mixed Logit Model of the UK Market for GM Food," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 33(4), pages 485-509, 04.
  19. Burton, Anthony C. & Carson, Katherine S. & Chilton, Susan M. & Hutchinson, W. George, 2003. "An experimental investigation of explanations for inconsistencies in responses to second offers in double referenda," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 472-489, November.
  20. Ikuho Kochi & Bryan Hubbell & Randall Kramer, 2006. "An Empirical Bayes Approach to Combining and Comparing Estimates of the Value of a Statistical Life for Environmental Policy Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(3), pages 385-406, July.
  21. Chib, Siddhartha, 1992. "Bayes inference in the Tobit censored regression model," Journal of Econometrics, Elsevier, vol. 51(1-2), pages 79-99.
  22. Bettman, James R & Luce, Mary Frances & Payne, John W, 1998. " Constructive Consumer Choice Processes," Journal of Consumer Research, University of Chicago Press, vol. 25(3), pages 187-217, December.
  23. John List, 2003. "Does market experience eliminate market anomalies?," Natural Field Experiments 00297, The Field Experiments Website.
  24. Riccardo Scarpa & Ian Bateman, 2000. "Efficiency Gains Afforded by Improved Bid Design versus Follow-up Valuation Questions in Discrete-Choice CV Studies," Land Economics, University of Wisconsin Press, vol. 76(2), pages 299-311.
  25. Jorge E. Ara�a & Carmelo J. León, 2002. "Willingness to pay for health risk reduction in the context of altruism," Health Economics, John Wiley & Sons, Ltd., vol. 11(7), pages 623-635.
  26. Cooper Joseph C., 1993. "Optimal Bid Selection for Dichotomous Choice Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 24(1), pages 25-40, January.
  27. DeShazo, J. R., 2002. "Designing Transactions without Framing Effects in Iterative Question Formats," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 360-385, May.
  28. Allenby, Greg M. & Rossi, Peter E., 1998. "Marketing models of consumer heterogeneity," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 57-78, November.
  29. Payne, John W & Bettman, James R & Schkade, David A, 1999. "Measuring Constructed Preferences: Towards a Building Code," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 243-70, December.
  30. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
  31. Kai, Li, 1998. "Bayesian inference in a simultaneous equation model with limited dependent variables," Journal of Econometrics, Elsevier, vol. 85(2), pages 387-400, August.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:36:y:2007:i:4:p:475-497. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.