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Decoy Effects in Choice Experiments and Contingent Valuation: Asymmetric Dominance

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  • Ian J. Bateman
  • Alistair Munro
  • Gregory L. Poe

Abstract

While a dominated choice involves a situation in which one option clearly dominates another on all relevant dimensions, an asymmetrically dominated choice typically arises where at least two options do not dominate each other and one (but not both) of those options does dominate a third option. We demonstrate that the introduction of such an asymmetrically dominated option can have a significant impact upon choices between non-dominated options within the same choice set for non-market goods. Furthermore, we show that this effect can then translate into significant impacts upon subsequent valuations for those non-dominated options.

Suggested Citation

  • Ian J. Bateman & Alistair Munro & Gregory L. Poe, 2008. "Decoy Effects in Choice Experiments and Contingent Valuation: Asymmetric Dominance," Land Economics, University of Wisconsin Press, vol. 84(1), pages 115-127.
    • Handle: RePEc:uwp:landec:v:84:y:2008:i:1:p:115-127
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    References listed on IDEAS

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    1. Cummings, Ronald G, et al, 1997. "Are Hypothetical Referenda Incentive Compatible?," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 609-621, June.
    2. Huber, Joel & Puto, Christopher, 1983. " Market Boundaries and Product Choice: Illustrating Attraction and Substitution Effects," Journal of Consumer Research, Oxford University Press, vol. 10(1), pages 31-44, June.
    3. Anthony Burton & Katherine Carson & Susan Chilton & W. Hutchinson, 2007. "Resolving questions about bias in real and hypothetical referenda," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 513-525, December.
    4. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
    5. Cameron, Trudy Ann & Poe, Gregory L. & Ethier, Robert G. & Schulze, William D., 2002. "Alternative Non-market Value-Elicitation Methods: Are the Underlying Preferences the Same?," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 391-425, November.
    6. Huber, Joel & Payne, John W & Puto, Christopher, 1982. " Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Oxford University Press, vol. 9(1), pages 90-98, June.
    7. Bateman, Ian J, et al, 1997. "Does Part-Whole Bias Exist? An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 107(441), pages 322-332, March.
    8. Ratneshwar, Srinivasan & Shocker, Allan D & Stewart, David W, 1987. " Toward Understanding the Attraction Effect: The Implications of Product Stimulus Meaningfulness and Familiarity," Journal of Consumer Research, Oxford University Press, vol. 13(4), pages 520-533, March.
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    Citations

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    Cited by:

    1. Fabio Galeotti, 2017. "The Attraction and Compromise Effects in Bargaining: Experimental Evidence," Post-Print halshs-01657317, HAL.
    2. Ho-Young Kim & So-Yeon Park & Seung-Hoon Yoo, 2016. "Public Acceptability of Introducing a Biogas Mandate in Korea: A Contingent Valuation Study," Sustainability, MDPI, Open Access Journal, vol. 8(11), pages 1-16, October.
    3. Robert J. Johnston & Randall S. Rosenberger, 2010. "Methods, Trends And Controversies In Contemporary Benefit Transfer," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 479-510, July.
    4. Sürücü, Oktay & Brangewitz, Sonja & Mir Djawadi, Behnud, 2017. "Asymmetric dominance effect with multiple decoys for low- and high-variance lotteries," Center for Mathematical Economics Working Papers 574, Center for Mathematical Economics, Bielefeld University.
    5. Benjamin Ho & John Taber & Gregory Poe & Antonio Bento, 2016. "The Effects of Moral Licensing and Moral Cleansing in Contingent Valuation and Laboratory Experiments on the Demand to Reduce Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(2), pages 317-340, June.
    6. Randall S. Rosenberger & Robert J. Johnston, 2009. "Selection Effects in Meta-Analysis and Benefit Transfer: Avoiding Unintended Consequences," Land Economics, University of Wisconsin Press, vol. 85(3), pages 410-428.
    7. Morse-Jones, Sian & Bateman, Ian J. & Kontoleon, Andreas & Ferrini, Silvia & Burgess, Neil D. & Turner, R. Kerry, 2012. "Stated preferences for tropical wildlife conservation amongst distant beneficiaries: Charisma, endemism, scope and substitution effects," Ecological Economics, Elsevier, vol. 78(C), pages 9-18.
    8. Martínez-Espiñeira, Roberto & Lyssenko, Nikita, 2011. "Correcting for the endogeneity of pro-environment behavioral choices in contingent valuation," Ecological Economics, Elsevier, vol. 70(8), pages 1435-1439, June.
    9. Day, Brett & Bateman, Ian J. & Carson, Richard T. & Dupont, Diane & Louviere, Jordan J. & Morimoto, Sanae & Scarpa, Riccardo & Wang, Paul, 2012. "Ordering effects and choice set awareness in repeat-response stated preference studies," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 73-91.
    10. Andrew Balmford & Brendan Fisher & Rhys Green & Robin Naidoo & Bernardo Strassburg & R. Kerry Turner & Ana Rodrigues, 2011. "Bringing Ecosystem Services into the Real World: An Operational Framework for Assessing the Economic Consequences of Losing Wild Nature," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(2), pages 161-175, February.
    11. repec:eee:rensus:v:81:y:2018:i:p1:p:242-249 is not listed on IDEAS
    12. Efe A. Ok & Pietro Ortoleva & Gil Riella, 2015. "Revealed (P)Reference Theory," American Economic Review, American Economic Association, vol. 105(1), pages 299-321, January.

    More about this item

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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