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Testing Willingness-to-Pay Models of Discrete Choice Contingent Valuation Survey Data

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  • Anna Alberini

Abstract

This paper considers models of willingness to pay (WTP) based on dichotomous choice contingent valuation survey data and examines the effect of the survey design on tests of goodness of fit. Simulations show that eliciting single binary responses result in tests that have low power in detecting departures from the maintained distribution of WTP, unless the sample size is truly large. The power of the tests improves if a follow-up question and a moderate number of sets of bid values are used, and if the bids are not placed on the extreme tails of the WTP distribution.

Suggested Citation

  • Anna Alberini, 1995. "Testing Willingness-to-Pay Models of Discrete Choice Contingent Valuation Survey Data," Land Economics, University of Wisconsin Press, vol. 71(1), pages 83-95.
  • Handle: RePEc:uwp:landec:v:71:y:1995:i:1:p:83-95
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    Cited by:

    1. Tsui, Hsiao-Chien, 2012. "Advertising, quality, and willingness-to-pay: Experimental examination of signaling theory," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1193-1203.
    2. Kai-Lih Chen, 1999. "Measuring values of wetlands in Taiwan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 2(1), pages 65-89, March.
    3. Pere Riera & Raúl Brey & Guillermo Gándara, 2008. "Bid design for non-parametric contingent valuation with a single bounded dichotomous choice format," Hacienda Pública Española, IEF, vol. 186(3), pages 43-60, October.
    4. Liao, Shu-Yi & Tseng, Wei-Chun & Chen, Chi-Chung, 2010. "Eliciting public preference for nuclear energy against the backdrop of global warming," Energy Policy, Elsevier, vol. 38(11), pages 7054-7069, November.
    5. Madureira, Lívia & Nunes, Luis C. & Borges, José G. & Falcão, André O., 2011. "Assessing forest management strategies using a contingent valuation approach and advanced visualisation techniques: A Portuguese case study," Journal of Forest Economics, Elsevier, pages 399-414.
    6. Swallow, Stephen K. & Opaluch, James J. & Weaver, Thomas F., 2001. "Strength-of-Preference Indicators and an Ordered-Response Model for Ordinarily Dichotomous, Discrete Choice Data," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 70-93, January.
    7. Jorge E. Araña & 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.
    8. Genius, Margarita & Strazzera, Elisabetta, 2011. "Can unbiased be tighter? Assessment of methods to reduce the bias-variance trade-off in WTP estimation," Resource and Energy Economics, Elsevier, vol. 33(1), pages 293-314, January.
    9. Xunzhou Ma & Shiqiu Zhang & Quan Mu, 2014. "How Do Residents Respond to Price under Increasing Block Tariffs? Evidence from Experiments in Urban Residential Water Demand in Beijing," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 28(14), pages 4895-4909, November.
    10. Junn-Yuan Teng & Wen-Chih Huang & Maw-Cherng Lin, 2010. "Systematic budget allocation for transportation construction projects: a case in Taiwan," Transportation, Springer, pages 331-361.
    11. Smith, V. Kerry & Huang, Ju-Chin, 1997. "Monte Carlo Benchmarks for Discrete Response Valuation Methods," Discussion Papers dp-97-23, Resources For the Future.
    12. Ju-Chin Huang & V. Kerry Smith, 1998. "Monte Carlo Benchmarks for Discrete Response Valuation Methods," Land Economics, University of Wisconsin Press, vol. 74(2), pages 186-202.
    13. Dror, David Mark & Radermacher, Ralf & Koren, Ruth, 2007. "Willingness to pay for health insurance among rural and poor persons: Field evidence from seven micro health insurance units in India," Health Policy, Elsevier, vol. 82(1), pages 12-27, June.
    14. Tseng, Wei-Chun & Chen, Chi-Chung, 2008. "Valuing the potential economic impact of climate change on the Taiwan trout," Ecological Economics, Elsevier, vol. 65(2), pages 282-291, April.
    15. Mora Rodriguez, Jhon James, 2013. "Introduccion a la teoría del consumidor
      [Introduction to Consumer Theory]
      ," MPRA Paper 48129, University Library of Munich, Germany, revised 08 Jul 2013.
    16. Kerr, Geoffrey N., 2000. "Dichotomous choice contingent valuation probability distributions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(2), June.
    17. Poor, P. Joan, 1999. "The Value Of Additional Central Flyway Wetlands: The Case Of Nebraska'S Rainwater Basin Wetlands," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July.

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