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Alternative Value Elicitation Formats in Contingent Valuation: A New Hope

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The single binary choice (SBC), referendum format has long been the recommended approach for eliciting values in stated preference surveys, based on respondent familiarity and incentive compatibility arguments. Nevertheless, researchers and practitioners commonly use alternative elicitation formats, and defend their design choices on the basis of efficiency or other criterion. While we are agnostic as to what format is best, in this paper we seek to advance the idea that incentive compatible elicitation using alternative formats is possible, and that designing surveys through the lens of theory can be beneficial. We highlight this paradigm by identifying a set of conditions under which two continuous response formats – purely open-ended (OE) questions and payment cards (PCs) – are incentive compatible. We then implement theory-informed value elicitations in the context of a flood control policy for New York City. We fail to reject convergent validity when comparing the theory-driven OE format with SBC, but reject convergent validity between the theory-driven PC and SBC formats. As an informative counterfactual, we find that a “standard” OE elicitation congruent with prior work leads to significantly lower values and a lower proportion of respondents who view the elicitation as consequential.

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File URL: http://web.utk.edu/~jhollad3/2016-02.pdf
File Function: First version, 2016
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Paper provided by University of Tennessee, Department of Economics in its series Working Papers with number 2016-02.

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Length: 45 pages
Date of creation: Aug 2016
Handle: RePEc:ten:wpaper:2016-02
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Web page: http://econ.bus.utk.edu/
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  4. Timothy C. Haab & Ju-Chin Huang & John C. Whitehead, 1999. "Are Hypothetical Referenda Incentive Compatible? A Comment," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 186-196, February.
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  9. W. J. Wouter Botzen & Jeroen C. J. M. Van Den Bergh, 2012. "Monetary Valuation Of Insurance Against Flood Risk Under Climate Change," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(3), pages 1005-1026, August.
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  13. Botzen, W.J.W. & van den Bergh, J.C.J.M., 2012. "Risk attitudes to low-probability climate change risks: WTP for flood insurance," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 151-166.
  14. Patricia A. Champ & Richard C. Bishop, 2006. "Is Willingness to Pay for a Public Good Sensitive to the Elicitation Format?," Land Economics, University of Wisconsin Press, vol. 82(2), pages 162-173.
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