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Lexicographic Preferences in Contingent Valuation: A Theoretical Framework with Illustrations

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  • Mika Rekola

Abstract

This paper considers some implications of L*-ordering, an incommensurable preference model proposed in earlier CVliterature. The structure and existence of inverse demand functions is shown to be a function of three elements, the relationship between goods and wants, WTA/ WTP formats and the endowment of the good. In a many-to-many relationship uncompensated and even compensated inverse demand functions may exist, whereas a one-to-one relationship, implicitly assumed in earlier literature, does not necessarily produce either. An illustration is provided in support of the theoretical framework, especially the hypothesis that one-to-one relationship and high share of CV responses revealing lexicographic preferences are correlated.

Suggested Citation

  • Mika Rekola, 2003. "Lexicographic Preferences in Contingent Valuation: A Theoretical Framework with Illustrations," Land Economics, University of Wisconsin Press, vol. 79(2), pages 277-291.
  • Handle: RePEc:uwp:landec:v:79:y:2003:i:2:p:277-291
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    References listed on IDEAS

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    Cited by:

    1. Vanschoenwinkel, Janka & Lizin, Sebastien & Swinnen, Gilbert & Azadi, Hossein & Van Passel, Steven, 2014. "Solar cooking in Senegalese villages: An application of best–worst scaling," Energy Policy, Elsevier, vol. 67(C), pages 447-458.
    2. Fischer, Anke & Hanley, Nick, 2007. "Analysing decision behaviour in stated preference surveys: A consumer psychological approach," Ecological Economics, Elsevier, vol. 61(2-3), pages 303-314, March.
    3. Gracia, Azucena & Barreiro-Hurlé, Jesús & Pérez y Pérez, Luis, 2012. "Can renewable energy be financed with higher electricity prices? Evidence from a Spanish region," Energy Policy, Elsevier, vol. 50(C), pages 784-794.
    4. Kosenius, Anna-Kaisa, 2013. "Preference discontinuity in choice experiment: Determinants and implications," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 138-145.
    5. repec:eee:eejocm:v:24:y:2017:i:c:p:36-50 is not listed on IDEAS
    6. Colombo, Sergio & Christie, Michael & Hanley, Nick, 2013. "What are the consequences of ignoring attributes in choice experiments? Implications for ecosystem service valuation," Ecological Economics, Elsevier, vol. 96(C), pages 25-35.
    7. Danny Campbell & W. George Hutchinson & Riccardo Scarpa, 2006. "Lexicographic Preferences in Discrete Choice Experiments: Consequences on Individual-Specific Willingness to Pay Estimates," Working Papers 2006.128, Fondazione Eni Enrico Mattei.
    8. Nick Hanley & Mikołaj Czajkowski, 2017. "Stated Preference valuation methods: an evolving tool for understanding choices and informing policy," Working Papers 2017-01, Faculty of Economic Sciences, University of Warsaw.
    9. Campbell, Danny & Hensher, David A. & Scarpa, Riccardo, 2012. "Cost thresholds, cut-offs and sensitivities in stated choice analysis: Identification and implications," Resource and Energy Economics, Elsevier, vol. 34(3), pages 396-411.
    10. Christie, Mike & Hanley, Nick & Warren, John & Murphy, Kevin & Wright, Robert & Hyde, Tony, 2006. "Valuing the diversity of biodiversity," Ecological Economics, Elsevier, vol. 58(2), pages 304-317, June.
    11. David Hensher, 2014. "Attribute processing as a behavioural strategy in choice making," Chapters,in: Handbook of Choice Modelling, chapter 12, pages 268-289 Edward Elgar Publishing.
    12. Saelensminde, Kjartan, 2006. "Causes and consequences of lexicographic choices in stated choice studies," Ecological Economics, Elsevier, vol. 59(3), pages 331-340, September.

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    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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