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Modeling Hidden Alternatives in Random Utility Models: An Application to Don’t Know Responses in Contingent Valuation

Author

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  • Steven Caudill
  • Peter Groothuis

Abstract

Wedevelop a multinomial logitmodel with missing information that can be used to test for hidden alternatives in random utility models and contingent valuation analysis. To illustrate our latentchoice technique, we focus on the “don’t know” responses in dichotomous choice contingent valuation questions. In this version of the latent-choice model, we probabilistically reassign “don’t know” responses to either the “yes” or “no” categories (or leave them in the “don’t know” category), if indicated by the data. We find that in our two studies a statistically significant number of the “don’t know” responses are actually “no” responses.
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Suggested Citation

  • Steven Caudill & Peter Groothuis, 2004. "Modeling Hidden Alternatives in Random Utility Models: An Application to Don’t Know Responses in Contingent Valuation," Working Papers 04-07, Department of Economics, Appalachian State University.
    • Handle: RePEc:apl:wpaper:04-07
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    Cited by:

    1. Kilgore, Michael A. & Snyder, Stephanie A. & Schertz, Joseph & Taff, Steven J., 2008. "What does it take to get family forest owners to enroll in a forest stewardship-type program?," Forest Policy and Economics, Elsevier, vol. 10(7-8), pages 507-514, October.
    2. Peter A. Groothuis & Jana D. Groothuis & John C. Whitehead, 2006. "The Willingness to Pay to Remove Billboards and Improve Mountain Views," Working Papers 06-04, Department of Economics, Appalachian State University.
    3. Peter A. Groothuis & Tanga A. Mohr & John C. Whitehead & Kristan A. Cockerill & William P. Anderson, Jr. & Chuanhui Gu, "undated". "The Influence of Scientific Information on the Willingness to Pay for Stormwater Runoff Abatement," Working Papers 17-05, Department of Economics, Appalachian State University.
    4. Fenichel, Eli P. & Lupi, Frank & Hoehn, John P. & Kaplowitz, Michael D., 2006. "Split-Sample Tests Of "Don'T Know" And "Indifferent" Responses In An Attribute Based Choice Model," 2006 Annual meeting, July 23-26, Long Beach, CA 21070, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Gordillo, Fernando & Elsasser, Peter & Günter, Sven, 2019. "Willingness to pay for forest conservation in Ecuador: Results from a nationwide contingent valuation survey in a combined “referendum” – “Consequential open-ended” design," Forest Policy and Economics, Elsevier, vol. 105(C), pages 28-39.
    6. Peter A. Groothuis & Tanga M. Mohr & John C. Whitehead & Kristan Cockerill, 2015. "Payment and Policy Consequentiality in Contingent Valuation," Working Papers 15-04, Department of Economics, Appalachian State University.
    7. Eli P. Fenichel & Frank Lupi & John P. Hoehn & Michael D. Kaplowitz, 2009. "Split-Sample Tests of "No Opinion" Responses in an Attribute-Based Choice Model," Land Economics, University of Wisconsin Press, vol. 85(2), pages 348-362.
    8. Groothuis, Peter A. & Cockerill, Kristan & Mohr, Tanga McDaniel, 2015. "Water does not flow up hill: determinants of willingness to pay for water conservation measures in the mountains of western North Carolina," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 59(C), pages 88-95.
    9. Groothuis, Peter A. & Whitehead, John C., 2009. "The Provision Point Mechanism and Scenario Rejection in Contingent Valuation," Agricultural and Resource Economics Review, Cambridge University Press, vol. 38(2), pages 271-280, October.
    10. Kristin Cockerill & Pete Groothuis & Tanga Mohr & Courtney Cooper, 2014. "Individual water: Water source as an indicator of attitudes about water management and conservation in rural regions," Working Papers 14-04, Department of Economics, Appalachian State University.
    11. Seon-Ae Kim & Jeffrey M. Gillespie & Krishna P. Paudel, 2008. "Rotational grazing adoption in cattle production under a cost-share agreement: does uncertainty have a role in conservation technology adoption?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 235-252, September.
    12. Groothuis, Peter A. & Groothuis, Jana D. & Whitehead, John C., 2008. "Green vs. green: Measuring the compensation required to site electrical generation windmills in a viewshed," Energy Policy, Elsevier, vol. 36(4), pages 1545-1550, April.
    13. Peter A. Groothuis & Tanga M. Mohr & John C. Whitehead & Kristan Cockerill & William P. Anderson, Jr. & Chuanhui Gu, 2020. "Measuring the Direct and Indirect Effect of Scientific Information On Valuing Stormwater Management Programs: A Hybrid Choice Model," Working Papers 20-02, Department of Economics, Appalachian State University.
    14. Gillespie, Jeffrey & Lewis, Darius, 2008. "Processor Willingness to Adopt a Crawfish Peeling Machine: An Application of Technology Adoption under Uncertainty," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(1), pages 369-383, April.
    15. Kelvin Balcombe & Iain Fraser, 2009. "Dichotomous‐choice contingent valuation with ‘dont know’ responses and misreporting," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1137-1152, November.
    16. Steven B. Caudill & Peter A. Groothuis & John C. Whitehead, 2006. "Testing for Hypothetical Bias in Contingent Valuation Using a Latent Choice Multinomial Logit Model," Working Papers 06-09, Department of Economics, Appalachian State University.

    More about this item

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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