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Contingent Valuation and Incentives

  • Patricia A. Champ
  • Nicholas E. Flores
  • Thomas C. Brown
  • PJames Chivers

We empirically investigate the effect of the payment mechanism on contingent values by asking a willingness-to-pay question with one of three different payment mechanisms: individual contribution, contribution with provision point, and referendum. We find statistical evidence of more affirmative responses in the referendum treatment relative to the individual contribution treatment, some weak statistical evidence of more affirmative responses in the referendum treatment relative to the provision point treatment, and no statistical evidence of more affirmative responses in the provision point treatment relative to the individual contribution treatment. The relative credibility of the three payment mechanisms is also examined.

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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 78 (2002)
Issue (Month): 4 ()
Pages: 591-604

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Handle: RePEc:uwp:landec:v:78:y:2002:i:4:p:591-604
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  1. Bohara, Alok K. & McKee, Michael & Berrens, Robert P. & Jenkins-Smith, Hank & Silva, Carol L. & Brookshire, David S., 1998. "Effects of Total Cost and Group-Size Information on Willingness to Pay Responses: Open Ended vs. Dichotomous Choice," Journal of Environmental Economics and Management, Elsevier, vol. 35(2), pages 142-163, March.
  2. Bagnoli, Mark & Lipman, Barton L, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 583-601, October.
  3. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July.
  4. Bagnoli, Mark & McKee, Michael, 1991. "Voluntary Contribution Games: Efficient Private Provision of Public Goods," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 351-66, April.
  5. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
  6. Riccardo Scarpa & Ian Bateman, 2000. "Efficiency Gains Afforded by Improved Bid Design versus Follow-up Valuation Questions in Discrete-Choice CV Studies," Land Economics, University of Wisconsin Press, vol. 76(2), pages 299-311.
  7. Andreoni, James & McGuire, Martin C., 1993. "Identifying the free riders : A simple algorithm for determining who will contribute to a public good," Journal of Public Economics, Elsevier, vol. 51(3), pages 447-454, July.
  8. Rondeau, Daniel & D. Schulze, William & Poe, Gregory L., 1999. "Voluntary revelation of the demand for public goods using a provision point mechanism," Journal of Public Economics, Elsevier, vol. 72(3), pages 455-470, June.
  9. Brubaker, Earl R, 1975. "Free Ride, Free Revelation, or Golden Rule?," Journal of Law and Economics, University of Chicago Press, vol. 18(1), pages 147-61, April.
  10. Satterthwaite, Mark Allen, 1975. "Strategy-proofness and Arrow's conditions: Existence and correspondence theorems for voting procedures and social welfare functions," Journal of Economic Theory, Elsevier, vol. 10(2), pages 187-217, April.
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