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The “more is less” phenomenon in Contingent and Inferred valuation

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  • Stachtiaris, Spiros
  • Drichoutis, Andreas
  • Klonaris, Stathis

Abstract

We examine inconsistencies in preference orderings of the “more is less” kind (Alevy et al. 2011) using the Contingent valuation (CV) and the Inferred valuation (IV) method (Lusk and Norwood 2009a, 2009b). We find that when moving in a familiar market for consumers (i.e., the food market) we only observe weak effects of inconsistencies. In addition, we find that the IV method is no better than the CV method in generating more consistent preference orderings. Surprisingly, we also find that the IV method generates higher valuations than CV, rendering one of its advantages of mitigating social desirability bias questionable.

Suggested Citation

  • Stachtiaris, Spiros & Drichoutis, Andreas & Klonaris, Stathis, 2011. "The “more is less” phenomenon in Contingent and Inferred valuation," MPRA Paper 29456, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:29456
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    References listed on IDEAS

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    1. Seidl, Christian, 2002. " Preference Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 621-655, December.
    2. Gregory, Robin, 1999. "Commentary on "Measuring Constructed Preferences: Towards a Building Code" by Payne, Bettman and Schkade," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 273-275, December.
    3. Christopher G. Leggett & Naomi S. Kleckner & Kevin J. Boyle & John W. Dufield & Robert Cameron Mitchell, 2003. "Social Desirability Bias in Contingent Valuation Surveys Administered Through In-Person Interviews," Land Economics, University of Wisconsin Press, vol. 79(4), pages 561-575.
    4. Julie A. Caswell & Eliza M. Mojduszka, 1996. "Using Informational Labeling to Influence the Market for Quality in Food Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1248-1253.
    5. Payne, John W & Bettman, James R & Schkade, David A, 1999. "Measuring Constructed Preferences: Towards a Building Code," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 243-270, December.
    6. Irwin, Julie R & Slovic, Paul & Lichtenstein, Sarah & McClelland, Gary H., 1993. "Preference Reversals and the Measurement of Environmental Values," Journal of Risk and Uncertainty, Springer, vol. 6(1), pages 5-18, January.
    7. Jonathan E. Alevy & John A. List & Wiktor L. Adamowicz, 2011. "How Can Behavioral Economics Inform Nonmarket Valuation? An Example from the Preference Reversal Literature," Land Economics, University of Wisconsin Press, vol. 87(3), pages 365-381.
    8. Rowe, Robert D. & Schulze, William D. & Breffle, William S., 1996. "A Test for Payment Card Biases," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 178-185, September.
    9. Shwarz, Norbert, 1999. "Defensible Preferences and the Public: Commentary on "Measuring Constructed Preferences: Towards a Building Code" by Payne, Bettman and Schkade," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 271-272, December.
    10. Fisher, Robert J, 1993. " Social Desirability Bias and the Validity of Indirect Questioning," Journal of Consumer Research, Oxford University Press, vol. 20(2), pages 303-315, September.
    11. Hsee, Christopher K., 1996. "The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(3), pages 247-257, September.
    12. Lusk, Jayson L. & Norwood, F. Bailey, 2009. "Bridging the gap between laboratory experiments and naturally occurring markets: An inferred valuation method," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 236-250, September.
    13. John A. List, 2002. "Preference Reversals of a Different Kind: The "More Is Less" Phenomenon," American Economic Review, American Economic Association, vol. 92(5), pages 1636-1643, December.
    14. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
    15. Jayson L. Lusk & F. Bailey Norwood, 2009. "An Inferred Valuation Method," Land Economics, University of Wisconsin Press, vol. 85(3), pages 500-514.
    16. John A. List & Robert P. Berrens & Alok K. Bohara & Joe Kerkvliet, 2004. "Examining the Role of Social Isolation on Stated Preferences," American Economic Review, American Economic Association, vol. 94(3), pages 741-752, June.
    17. Grether, David M & Plott, Charles R, 1979. "Economic Theory of Choice and the Preference Reversal Phenomenon," American Economic Review, American Economic Association, vol. 69(4), pages 623-638, September.
    18. Andreas C. Drichoutis & Panagiotis Lazaridis & Rodolfo M. Nayga Jr, 2009. "On Consumers' Valuation Of Nutrition Information," Bulletin of Economic Research, Wiley Blackwell, vol. 61(3), pages 223-247, July.
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    More about this item

    Keywords

    willingness-to-pay (WTP); Contingent Valuation (CV); Inferred Valuation(IV); preference reversals;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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