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Willingness-to-Pay Estimates Using the Double-Bounded Dichotomous-Choice Contingent Valuation Format: A Test for Validity and Precision in a Bayesian Framework

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  • Donald M. McLeod
  • Olvar Bergland

Abstract

The Double-Bounded Dichotomous- Choice (DB-DC) Contingent Valuation format is thought to yield more precise welfare estimates. Questions remain about its validity. The initial bid may represent information with which respondents update their willingness to pay. A Bayesian model of respondent decision making is estimated for two data sets. The results indicate updating or shifts in respondent willingness to pay between iterated valuations. Nonparametric testing of the welfare estimates reveals that the model incorporating updating yields different values from the standard model. The expected increases in the precision of the DB-DC welfare estimates are lost when updating occurs.

Suggested Citation

  • Donald M. McLeod & Olvar Bergland, 1999. "Willingness-to-Pay Estimates Using the Double-Bounded Dichotomous-Choice Contingent Valuation Format: A Test for Validity and Precision in a Bayesian Framework," Land Economics, University of Wisconsin Press, vol. 75(1), pages 115-125.
  • Handle: RePEc:uwp:landec:v:75:y:1999:i:1:p:115-125
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    Cited by:

    1. Petrolia, Daniel & Interis, Matthew & Hwang, Joonghyun, 2015. "Single-Choice, Repeated-Choice, and Best-Worst Elicitation Formats: Do Results Differ and by How Much?," Working Papers 212479, Mississippi State University, Department of Agricultural Economics.
    2. David Aadland & Arthur Caplan & Owen Phillips, 2007. "A Bayesian examination of information and uncertainty in contingent valuation," Journal of Risk and Uncertainty, Springer, vol. 35(2), pages 149-178, October.
    3. Andrew Mill, Greig & van Rensburg, Tom M. & Hynes, Stephen & Dooley, Conor, 2007. "Preferences for multiple use forest management in Ireland: Citizen and consumer perpectives," Ecological Economics, Elsevier, vol. 60(3), pages 642-653, January.
    4. 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.
    5. Krishna, Vijesh V. & Qaim, Matin, 2007. "Estimating the adoption of Bt eggplant in India: Who Benefits from public-private partnership?," Food Policy, Elsevier, vol. 32(5-6), pages 523-543.
    6. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    7. Frédéric Salladarré & Dorothée Brécard & Sterenn Lucas & Pierrick Ollivier, 2016. "Are French consumers ready to pay a premium for eco-labeled seafood products? A contingent valuation estimation with heterogeneous anchoring," Agricultural Economics, International Association of Agricultural Economists, vol. 47(2), pages 247-258, March.
    8. Mekonnen, Tigist, 2017. "Willingness to pay for agricultural risk insurance as a strategy to adapt climate change," MERIT Working Papers 028, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. 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.
    10. Michaël Schwarzinger & Fabrice Carrat & Stéphane Luchini, 2009. ""If you have the flu symptoms, your asymptomatic spouse may better answer the willingness-to-pay question". Evidence from a double-bounded dichotomous choice model with heterogeneous anchori," Post-Print inserm-00636179, HAL.
    11. Garces-Voisenat, Juan-Pedro & Mukherjee, Zinnia, 2012. "Estimating the Willingness to Pay for Environmental Resources in the Chilean Patagonia," Working Papers 105, Wake Forest University, Economics Department.
    12. 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.
    13. Day, Brett & Pinto Prades, Jose-Luis, 2010. "Ordering anomalies in choice experiments," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 271-285, May.
    14. Aadland, David & Caplan, Arthur J., 2005. "A Bayesian Examination of Anchoring Bias and Cheap Talks in Constructed Markets," 2005 Annual meeting, July 24-27, Providence, RI 19568, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Schwarzinger, Michaël & Carrat, Fabrice & Luchini, Stéphane, 2009. ""If you have the flu symptoms, your asymptomatic spouse may better answer the willingness-to-pay question": Evidence from a double-bounded dichotomous choice model with heterogeneous anchori," Journal of Health Economics, Elsevier, vol. 28(4), pages 873-884, July.
    16. M. Genius & E. Strazzera, 2005. "Modeling Elicitation effects in contingent valuation studies: a Monte Carlo Analysis of the bivariate approach," Working Paper CRENoS 200502, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    17. Jeffrey R. Czajkowski, 2009. "Modeling Shifts in Willingness to Pay from a Bayesian Updating Perspective," Land Economics, University of Wisconsin Press, vol. 85(2), pages 308-328.
    18. Barton, David N., 2002. "The transferability of benefit transfer: contingent valuation of water quality improvements in Costa Rica," Ecological Economics, Elsevier, vol. 42(1-2), pages 147-164, August.
    19. Kim, GwanSeon & Petrolia, Daniel R. & Interis, Matthew G., 2012. "A Method for Improving Welfare Estimates from Multiple-Referendum Surveys," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), August.
    20. Asfaw, Abay & Braun, Joachim von, 2004. "Can community health insurance schemes shield the poor against the downside health effects of economic reforms? The case of rural ethiopia," Health Policy, Elsevier, vol. 70(1), pages 97-108, October.

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