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It’s the Cost Credibility, Stupid! A Comment on “Consequentiality: A Theoretical and Experimental Exploration of a Single Binary Choice”

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  • Rheinberger, Christoph
  • Schläpfer, Felix

Abstract

This comment takes up the discussion about the incentive compatibility of contingent valuation surveys revived by a recent paper of Carson, Groves and List (2014) in this journal. We feel that the conclusions the authors draw from their theoretical and experimental work cannot be generalized to contingent valuation (CV) surveys. We single out the lack of cost credibility as the principal obstacle to incentive compatibility and propose some amendments to the survey protocol that foster the cost credibility of random-bid CV studies.

Suggested Citation

  • Rheinberger, Christoph & Schläpfer, Felix, 2015. "It’s the Cost Credibility, Stupid! A Comment on “Consequentiality: A Theoretical and Experimental Exploration of a Single Binary Choice”," TSE Working Papers 15-573, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:29292
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    References listed on IDEAS

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    1. Green, Donald & Jacowitz, Karen E. & Kahneman, Daniel & McFadden, Daniel, 1998. "Referendum contingent valuation, anchoring, and willingness to pay for public goods," Resource and Energy Economics, Elsevier, vol. 20(2), pages 85-116, June.
    2. Flores, Nicholas E. & Strong, Aaron, 2007. "Cost credibility and the stated preference analysis of public goods," Resource and Energy Economics, Elsevier, vol. 29(3), pages 195-205, September.
    3. Richard T. Carson & Theodore Groves & John A. List, 2014. "Consequentiality: A Theoretical and Experimental Exploration of a Single Binary Choice," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 171-207.
    4. Stephane Hess & Nesha Beharry-Borg, 2012. "Accounting for Latent Attitudes in Willingness-to-Pay Studies: The Case of Coastal Water Quality Improvements in Tobago," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(1), pages 109-131, May.
    5. Thomas Lundhede & Jette Bredahl Jacobsen & Nick Hanley & Niels Strange & Bo Jellesmark Thorsen, 2015. "Incorporating Outcome Uncertainty and Prior Outcome Beliefs in Stated Preferences," Land Economics, University of Wisconsin Press, vol. 91(2), pages 296-316.
    6. Strong, Aaron & Flores, Nicholas E., 2008. "Estimating the economic benefits of acidic rock drainage clean up using cost shares," Ecological Economics, Elsevier, vol. 65(2), pages 348-355, April.
    7. Walker, Joan & Ben-Akiva, Moshe, 2002. "Generalized random utility model," Mathematical Social Sciences, Elsevier, vol. 43(3), pages 303-343, July.
    8. Johnston, Robert J., 2006. "Is hypothetical bias universal? Validating contingent valuation responses using a binding public referendum," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 469-481, July.
    9. Schlapfer, Felix, 2008. "Contingent valuation: A new perspective," Ecological Economics, Elsevier, vol. 64(4), pages 729-740, February.
    10. Schlapfer, Felix & Schmitt, Marcel, 2007. "Anchors, endorsements, and preferences: A field experiment," Resource and Energy Economics, Elsevier, vol. 29(3), pages 229-243, September.
    11. Jerry Hausman, 2012. "Contingent Valuation: From Dubious to Hopeless," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 43-56, Fall.
    12. Patricia A. Champ & Nicholas E. Flores & Thomas C. Brown & PJames Chivers, 2002. "Contingent Valuation and Incentives," Land Economics, University of Wisconsin Press, vol. 78(4), pages 591-604.
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    Cited by:

    1. Christoph M. Rheinberger & Felix Schläpfer & Michael Lobsiger, 2017. "A Novel Approach to Estimating the Demand Value of Road Safety," Working Papers 2017.15, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    Contingent valuation; cost credibility; incentive compatibility;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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