Title
Incentive compatibility and procedural invariance testing of the one-and-one-half-bound dichotomous choice elicitation method : distinguishing strategic behaviour from the anchoring heuristic
Description
The contingent valuation method for estimating willingness to pay for public goods typically adopts a single referendum question format which is statistically inefficient. As an alternative, Cooper, Hanemann and Signorello (2002) propose the ‘one-and-one-half bound’ (OOHB) format allowing researchers to question respondents about both a lower and higher limit upon project costs, thereby securing substantial statistical efficiency gains. These bounds are presented prior to the elicitation of responses thereby avoiding the negative ‘surprise’ induced by an unanticipated second question. However, this approach conflicts with the Gibbard-Satterthwaite result that only a single referendum format question is incentive compatible. The OOHB method may therefore be liable to strategic behaviour or reliance upon the anchoring heuristic observed in other repeated response elicitation formats. In a first formal test of the method we show that it fails crucial tests of procedural invariance and induces strategic behaviour amongst responses.
URL
http://researcharchive.lincoln.ac.nz/dspace/bitstream/10182/389/1/cd_dp_113.pdf
URL Description
Full text
Language
English
Author
Ian Julian Bateman
Author
Diane Dupont
Author
Brett Day
Author
Stavros Georgiou

experimental economics; contingent valuation; elicitation techniques; one-and-one-half bound; preference anomalies; anchoring heuristic; strategic behaviour; willingness to pay; water quality

Is this item peer reviewed?
No
ISBN
9781877176906
ISSN
1174-5045
Publisher
Lincoln University
Date of publication
01 January 2006
Number of pages
28
Place of publication
Canterbury, New Zealand
Series title
Lincoln University Commerce Division discussion paper