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Using Ex Ante Approaches to Obtain Credible Signals for Value in Contingent Markets: Evidence from the Field

  • Craig E. Landry
  • John A. List

While contingent valuation remains the only option available for measurement of total economic value of nonmarketed goods, the method has been criticized due to its hypothetical nature. We analyze field experimental data to evaluate two ex ante approaches to attenuating hypothetical bias, directly comparing value statements across four distinct referenda: hypothetical, "cheap talk", "consequential", and real. Our empirical evidence suggests two major findings: hypothetical responses are significantly different from real responses; and responses in the consequential and cheap talk treatments are statistically indistinguishable from real responses. We review the potential for each method to produce reliable results in the field. Copyright 2007, Oxford University Press.

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Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 89 (2007)
Issue (Month): 2 ()
Pages: 420-429

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Handle: RePEc:oup:ajagec:v:89:y:2007:i:2:p:420-429
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  1. Smith, V. Kerry & Mansfield, Carol, 1996. "Buying Time: Real and Hypothetical Offers," Working Papers 96-04, Duke University, Department of Economics.
  2. David Bjornstad & Ronald Cummings & Laura Osborne, 1997. "A Learning Design for Reducing Hypothetical Bias in the Contingent Valuation Method," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(3), pages 207-221, October.
  3. John List, 2001. "Do explicit warnings eliminate the hypothetical bias in elicitation procedures? Evidence from field auctions for sportscards," Framed Field Experiments 00163, The Field Experiments Website.
  4. John A. Fox & Jason F. Shogren & Dermot J. Hayes & James B. Kliebenstein, 1998. "CVM-X: Calibrating Contingent Values with Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 455-465.
  5. Powe, N.A. & Garrod, G.D. & McMahon, P.L., 2005. "Mixing methods within stated preference environmental valuation: choice experiments and post-questionnaire qualitative analysis," Ecological Economics, Elsevier, vol. 52(4), pages 513-526, March.
  6. List, John A. & Shogren, Jason F., 2002. "Calibration of Willingness-to-Accept," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 219-233, March.
  7. Taylor, Laura O., 1998. "Incentive Compatible Referenda And The Valuation Of Environmental Goods," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), October.
  8. Bulte, Erwin & Gerking, Shelby & List, John A. & de Zeeuw, Aart, 2005. "The effect of varying the causes of environmental problems on stated WTP values: evidence from a field study," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 330-342, March.
  9. Champ, Patricia A. & Bishop, Richard C. & Brown, Thomas C. & McCollum, Daniel W., 1997. "Using Donation Mechanisms to Value Nonuse Benefits from Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 151-162, June.
  10. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
  11. David Aadland & Arthur J. Caplan, 2003. "Willingness to Pay for Curbside Recycling with Detection and Mitigation of Hypothetical Bias," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 492-502.
  12. Poe, Gregory L. & Clark, Jeremy & Schulze, William D., 1997. "Can Hypothetical, Questions Predict Actual, Participation In Public Programs? A Field Validity Test Using A Provision Point Mechanism," Working Papers 7264, Cornell University, Department of Applied Economics and Management.
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