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

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  • Jorge Araña
  • Carmelo León

Abstract

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

Suggested Citation

  • Jorge Araña & Carmelo León, 2007. "Repeated Dichotomous Choice Formats for Elicitation of Willingness to Pay: Simultaneous Estimation and Anchoring Effect," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(4), pages 475-497, April.
    • Handle: RePEc:kap:enreec:v:36:y:2007:i:4:p:475-497
    DOI: 10.1007/s10640-006-9038-7
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    5. Champonnois, Victor & Chanel, Olivier & Makhloufi, Khaled, 2018. "Reducing the anchoring bias in multiple question CV surveys," Journal of choice modelling, Elsevier, vol. 28(C), pages 1-9.
    6. William F. Vásquez & Jennifer M. Trudeau & Jessica Alicea‐Planas, 2021. "Immediate and informative feedback during a pandemic: Using stated preference analysis to predict vaccine uptake rates," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3123-3137, December.
    7. Wang, Yushi & Wu, Libo & Zhou, Yang, 2024. "Household's willingness to pay for renewable electricity: A meta-analysis," Energy Economics, Elsevier, vol. 131(C).
    8. Sorada Tapsuwan & Michael Burton & James Perriam, 2010. "A Multivariate Probit Analysis of Willingness to Pay for Cave Conservation: A Case Study of Yanchep National Park, Western Australia," Tourism Economics, , vol. 16(4), pages 1019-1035, December.
    9. Carmelo J. León & Jorge E. Araña, 2014. "Impact of Different Dimensions of Corporate Social Responsibility on Tourism Demand: Does the Status Quo Matter?," Tourism Economics, , vol. 20(3), pages 493-507, June.
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    11. Araña, Jorge E. & León, Carmelo J., 2008. "Do emotions matter? Coherent preferences under anchoring and emotional effects," Ecological Economics, Elsevier, vol. 66(4), pages 700-711, July.

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