Contingent Valuation, Hypothetical Bias, and Experimental Economics
By James J. Murphy, Thomas Stevens. Agricultural and Resource Economics Review, 2004
126 citations recorded by the source corpus.
Although the contingent valuation method has been widely used to value a diverse array of non-market environmental and natural resource commodities, recent empirical evidence suggests it may not accurately estimate real economic values. The hypothetical nature of environmental valuation surveys typically results in responses that are significantly greater than actual payments. Economists have had mixed success in developing techniques designed to control for this “hypothetical bias.” This paper highlights the role of experimental economics in addressing hypothetical bias, and identifies a gap in the existing literature by focusing on the underlying causes of this bias. Most of the calibration techniques used today lack a theoretical justification, and therefore these procedures need to be used with caution. We argue that future experimental research should investigate the reasons hypothetical bias persists. A better understanding of the causes should enhance the effectiveness of calibration techniques.
Subfields: Economics and Econometrics, General Decision Sciences
View Paper: https://www.semanticscholar.org/paper/6e61011b593c76f6da05dbc34b8137ce111127f8
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Citations in the corpus
- Consumers' and producers' expectations towards geographical indications Empirical evidence for a German case study (2011, background): “In hypothetical settings, researchers typically worry about two possible biases, the social desirability bias and the hypothetical bias (Lusk and Norwood, 2009; Murphy and Stevens, 2004).”
- Testing the Effectiveness of Certainty Scales, Cheap Talk, and Dissonance-Minimization in Reducing Hypothetical Bias in Contingent Valuation Studies (2009, background): “This is not a new idea; Opaluch and Segerson (1989), Dubourg et al. (1997), Gregory et al. (1995), Ready et al. (1995),Wang (1997), Murphy and Stevens (2004), and undoubtedly others have suggested that imprecision of preference can be characterized by a preference range.”