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Experimental Designs for Environmental Valuation with Choice-Experiments: A Monte-Carlo Investigation

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Abstract

We review the practice of experimental design in the environmental economics literature concerned with choice experiments. We then contrast this with advances in the field of experimental design and present a comparison of statistical efficiency across four different experimental designs evaluated by Monte Carlo experiments. Two different situations are envisaged. First, a correct a priori knowledge of the multinomial logit specification used to derive the design and then an incorrect one. The data generating process is based on estimates from data of a real choice experiment with which preference for rural landscape attributes were studied. Results indicate the D-optimal designs are promising, especially those based on Bayesian algorithms with informative prior. However, if good a priori information is lacking, and if there is strong uncertainty about the real data generating process - conditions which are quite common in environmental valuation - then practitioners might be better off with conventional fractional designs from linear models. Under misspecification, a design of this type produces less biased estimates than its competitors.

Suggested Citation

  • Silvia Ferrini & Riccardo Scarpa, 2005. "Experimental Designs for Environmental Valuation with Choice-Experiments: A Monte-Carlo Investigation," Working Papers in Economics 05/08, University of Waikato.
  • Handle: RePEc:wai:econwp:05/08
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    Citations

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    Cited by:

    1. Danny Campbell & W. George Hutchinson & Riccardo Scarpa, 2006. "Lexicographic Preferences in Discrete Choice Experiments: Consequences on Individual-Specific Willingness to Pay Estimates," Working Papers 2006.128, Fondazione Eni Enrico Mattei.
    2. Danny Campbell & W. George Hutchinson & Riccardo Scarpa, 2006. "Using Discrete Choice Experiments to Derive Individual-Specific WTP Estimates for Landscape Improvements under Agri-Environmental Schemes: Evidence from the Rural Environment Protection Scheme in Irel," Working Papers 2006.26, Fondazione Eni Enrico Mattei.
    3. Danny Campbell & George Hutchinson & Riccardo Scarpa, 2006. "Integrating landscape improvement indices and discrete choice experiments: evidence from the Rural Environment Protection Scheme in Ireland," Working Papers 0609, Rural Economy and Development Programme,Teagasc.
    4. Danny Campbell & George Hutchinson & Riccardo Scarpa, 2006. "Benefit Estimates For Landscape Improvements: Sequential Bayesian Design And Respondents’ Rationality In A Choice Experiment Study," Working Papers 0606, Rural Economy and Development Programme,Teagasc.
    5. Alberto Zanni & Alastair Bailey & Sophia Davidova, 2008. "Analysis of the Vocational and Residential Preferences of a Rural Population: Application of an Experimental Technique to Rural Slovenia," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(1), pages 89-114.
    6. Danny Campbell & George Hutchinson & Riccardo Scarpa, 2006. "Using mixed logit models to derive individual-specific WTP estimates for landscape improvements under agri-environmental schemes: evidence from the Rural Environment Protection Scheme in Ireland," Working Papers 0607, Rural Economy and Development Programme,Teagasc.

    More about this item

    Keywords

    logit experimental design; efficiency; Monte Carlo choice experiments; non-market valuation;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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