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Incentive Incompatibility and Starting-Point Bias in Iterative Valuation Questions

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  • John C. Whitehead

Abstract

We test for incentive incompatibility and starting-point bias to describe the effects of iterative valuation questions on willingness to pay. We compare double-, triple-, and multiplebounded models with data from two surveys with similar designs of the valuation questions. We find that incentive incompatibility is present in both sets of data and starting-point bias is present in one. The efficiency of the willingness-to-pay estimate is improved in only one set of data. The potential loss from using iterative questions without controlling for both incentive incompatibility and starting-point bias is biased willingness-topay estimates.

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  • 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.
    • Handle: RePEc:uwp:landec:v:78:y:2002:i:2:p:285-297
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    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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