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Do Experience and Cheap Talk influence Willingness to Pay in an Open-Ended Contingent Valuation Survey?

Author

Listed:
  • Carlsson, Fredrik

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Martinsson, Peter

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

In this paper we analyze the effect of information on respondents’ willingness to pay to avoid power outages in Sweden, by employing an open-ended contingent valuation survey.Two aspects of information are tested; (i) if increased experience from power outages manifested by one of the worst hurricanes ever in Sweden with long power outages as a result and (ii) if a cheap talk script affect the respondents’ WTP. The results indicate that experience increases the proportion of respondents with a zero WTP significantly, which is consistent with the view presented in media in the backwash of the hurricane stressing the right to access power without outages. On the other hand, the cheap talk script decreased the proportion of respondents with zero WTP. In both cases, however, there is no significant effect on the stated WTP conditional on reporting a positive WTP. Thus,information seems to affect the proportion of respondents with a zero WTP, and implications of this on future applications of open-ended contingent valuation surveys are discussed.

Suggested Citation

  • Carlsson, Fredrik & Martinsson, Peter, 2006. "Do Experience and Cheap Talk influence Willingness to Pay in an Open-Ended Contingent Valuation Survey?," Working Papers in Economics 190, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0190
    Note: Published with new title "The effect of power outages and cheap talk on willingness to pay to reduce outages" in Energy Economics, 2011, Vol. 33, pp. 790-798.
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    References listed on IDEAS

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    1. Whitehead John C. & Blomquist Glenn C. & Hoban Thomas J. & Clifford William B., 1995. "Assessing the Validity and Reliability of Contingent Values: A Comparison of On-Site Users, Off-Site Users, and Non-users," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 238-251, September.
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    Citations

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    Cited by:

    1. Pepermans, Guido, 2011. "The value of continuous power supply for Flemish households," Energy Policy, Elsevier, vol. 39(12), pages 7853-7864.
    2. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stéphane Luchini, 2011. "A Test of Cheap Talk in Different Hypothetical Contexts: The Case of Air Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(1), pages 111-130, September.
    3. Chen, Xuqi & Gao, Zhifeng & House, Lisa, 2015. "Willingness to Pay for Niche Fresh Produce across the States: Why Are Consumers Willing to Pay More for the Less Favorite?," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196901, Southern Agricultural Economics Association.
    4. Giles Atkinson & Sian Morse-Jones & Susana Mourato & Allan Provins, 2012. "‘When to Take “No” for an Answer’? Using Entreaties to Reduce Protests in Contingent Valuation Studies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(4), pages 497-523, April.
    5. repec:eee:eejocm:v:24:y:2017:i:c:p:36-50 is not listed on IDEAS
    6. Aygul Ozbafli & Glenn P. Jenkins, 2015. "The Willingness To Pay By Households For Improved Reliability Of Electricity Service," Development Discussion Papers 2015-02, JDI Executive Programs.
    7. Shi, Lijia & Gao, Zhifeng & Chen, Xuqi, 2014. "The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation," Food Policy, Elsevier, vol. 46(C), pages 13-21.
    8. Anabela Botelho & Lina Sofia Lourenço-Gomes & Lígia Costa Pinto & Sara Sousa & Marieta Valente, 2015. "Annoyance and welfare costs from the presence of renewable energy power plants: an application of the contingent valuation method," NIMA Working Papers 60, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.

    More about this item

    Keywords

    Contingent Valuation; Cheap talk; Information; Power outages;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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