factors influencing differences between survey and market based environmental value measures a unique us database combining survey and housing data is used to obtain household level stated and market based willingness to pay wtp measures to avoid living near landfills systematic differe

multi product newsboy problem with limited capacity and outsourcing this paper considers a multi product newsboy system that produces multiple products for fulfilling independently uncertain demands which share the same production capacity to deal with possible shortage of limited capacity productions can be outsourced we consider two outsourcing strategies zero lead time outsourcing and nonzero lead time outsourcing the structural properties and solution procedures for the profit maximization models are developed numerical results are provided for obtaining some managerial insights

alternative value elicitation formats in contingent valuation mechanism design and convergent validity abstract to date much of the theoretical work on the incentive properties of contingent valuation surveys has focused on the oft recommended single binary choice sbc referendum format this work has identified conditions under which an sbc elicitation is incentive compatible and empirical evidence lends support to the predictive power of the theory nevertheless researchers and practitioners commonly use alternative elicitation formats and defend their design choices based on efficiency and other criteria in this study we demonstrate that it is possible to identify conditions under which alternative elicitation formats are incentive compatible using as examples open ended oe and payment card pc question formats 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 in mean willingness to pay 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

referenda under oath herein we explore whether a solemn oath can eliminate hypothetical bias in a voting referenda a popular elicitation mechanism promoted in non market valuation exercises for its incentive compatibility properties first we reject the null hypothesis that a hypothetical bias does not exist second we observe that people who sign an oath are significantly less likely to vote for the public good in a hypothetical referenda we complement this evidence with a self reported measure of honesty which confirms that the oath increases truthfulness in answers this result opens interesting avenues for improving the elicitation of preferences in the lab and beyond

bridging the gap between the field and the lab environmental goods policy maker input and consequentiality abstract this paper explores the criterion validity of stated preference methods through experimental referenda that capture key characteristics of a stated preference survey for a proposed environmental program in particular we investigate whether advisory referenda where participant votes have either known or unknown weight in the policy decision can elicit values comparable to that of a standard incentive compatible referendum when participants regard their votes as consequential our results suggest there is no elicitation bias with advisory referenda for advisory referenda where participants view their votes as inconsequential and for purely hypothetical referenda we observe elicitation bias

of birds and books more on hypothetical referenda recently cummings et al 1997 have reported a test of whether a hypothetical referendum using a majority rule is incentive compatible motivated in part by the national oceanic and atmospheric administration s noaa initially proposed rules for using contingent valuation in natural resource damage assessments these authors conclude that results from our experiments which involve a relatively simple good that is valued in a simple and controlled setting suggest that this hypothesis the incentive compatibility of a hypothetical referendum using majority rule be rejected p 619 this note questions the relevance of the authors results for the recommendations in the noaa rules and in the process identifies the general difficulties posed in measuring the amount of a public good 1 the noaa rules for contingent valuation were proposed by a distinguished panel of social scientists including two nobel laureates in economics kenneth arrow and robert solow arrow et al 1993 the guidelines were intended to enhance the reliability of contingent valuation estimates of willingness to pay for restoring injured natural resources as part of damage assessments required by the comprehensive environmental response compensation and

discrete choice survey experiments a comparison using flexible methods abstract this study investigates the convergent validity of discrete choice contingent valuation cv and contingent rating ranking cr methods using flexible econometric methods our results suggest that cv and cr can produce consistent data achieve convergent validity when respondent s preferred choices and the same changes in environmental quality are considered we also find that cr models that go beyond modeling the preferred choice and include additional ranks cannot be pooled with the cv models accounting for preference heterogeneity via random coefficient models and their flexible structure does not make rejection of the hypothesis of convergent validity less likely but instead rejects the hypothesis to about the same degree or perhaps more frequently than fixed parameter models commonly used in the literature

valuation on the frontier calibrating actual and hypothetical statements of value the lack of robust evidence showing that hypothetical behavior directly maps into real actions remains a major concern for proponents of stated preference nonmarket valuation techniques this article explores a new statistical approach to link actual and hypothetical statements using willingness topay field data on individual bids from sealed bid auctions for a 350 baseball card our results are quite promising estimating a stochastic frontier regression model that makes use of data that any contingent valuation survey would obtain we derive a bid function that is not statistically different from the bid function obtained from subjects in an actual auction if other data can be calibrated similarly this method holds significant promise since an appropriate calibration scheme ex ante or ex post can be invaluable to the policy maker that desires more accurate estimates of use and nonuse values for nonmarket goods and services benefit cost analysis remains the dominant paradigm used throughout the public sector yet a recurring issue in properly estimating the total benefits of nonmarket goods and services is whether hypothetical statements map into real behavior some recently published studies provide evidence that suggests important differences exist between responses from real and hypothetical valuation questions 1 this observation triggered a search for an ex ante and ex post procedure to correct the systematic bias between intentions and actions in valuation exercises recent technology using ex ante procedures has produced some strong evidence that hypothetical bias can be overcome by using a cheap talk scheme see e g cummings and taylor list ex post calibration has also shown some signs of promise as work due to blackburn harrison

combining revealed and stated preferences consistency tests and their interpretations this article models the recreation demand for iowa wetlands combining survey data on both actual usage patterns i e revealed preferences rps and anticipated changes to those patterns under hypothetical increases in trip costs i e stated preferences sps we formulate and test specific hypotheses concerning potential sources of bias in each approach and discuss what can be learned about the validity of the models from such tests

hypothetical versus real willingness to pay in the health care sector results from a field experiment abstract we conducted a field experiment comparing hypothetical and real purchase decisions for a pharmacist provided asthma management program among 172 subjects with asthma subjects received either a dichotomous choice contingent valuation question or were given the opportunity to actually enroll in the program three different prices were used us 15 40 and 80 in the hypothetical group 38 of subjects said that they would purchase the good at the stated price but only 12 of subjects in the real group purchased the good p 0 000 we cannot however reject the null hypothesis that definitely sure hypothetical yes responses as identified in a follow up question correspond to real yes responses we conclude that the dichotomous choice contingent valuation method overestimates willingness to pay but that it may be possible to correct for this overestimation by sorting out definitely sure yes responses

toward choice theoretic foundations for behavioral welfare economics interest in behavioral economics has grown in recent years stimulated largely by accumulating evidence that the standard model of consumer decision making provides an inadequate positive description of human behavior behavioral models are increasingly finding their way into policy evaluation which inevitably involves welfare analysis no consensus concerning the appropriate standards and criteria for behavioral welfare analysis has emerged yet this paper summarizes our effort to develop a unified framework for behavioral welfare economics for a detailed discussion see bernheim and rangel 2007 one that can be viewed as a natural extension of standard welfare economics standard welfare analysis is based on choice not on utility or preferences in its simplest form it instructs the planner to respect the choices an individual would make for himself the guiding normative principle is an extension of the libertarian deference to freedom of choice which takes the view that it is better to give a person the thing he would choose for himself rather than something that someone else would choose for him we show that it is possible to extend the standard choice theoretic approach to welfare analysis to situations where individuals make inconsistent choices which are prevalent in behavioral economics

rewards experience and decision costs in first price auctions consistent with a model of asymmetric risk aversion subjects in first price auctions consistently bid above the risk neutral nash prediction it has been argued that this is due to low opportunity cost of deviating from the risk neutral bid we increase opportunity cost and payoff levels by factors of 0 1 5 10 and 20 from the normal levels generating payoffs up to 250 for risk neutral subjects and observe an insignificant increase in the slope of individual bid functions the rmse of bids declines significantly this is consistent with a reward decision cost model of bidding behavior

monetary rewards and decision cost in experimental economics a survey of thirty one experimental studies which report data on the comparative effects of monetary rewards and opportunity cost shows 1 several studies in which increased rewards shift the central tendency of the data toward the predictions of rational models 2 in virtually all cases rewards reduce the variance of the data around the predicted outcome this is consistent with a model in which rewards are balanced against decision cost in agent behavior and explicates the argument that when rational models fail it can be attributed to low opportunity cost of deviations from the rational prediction

an incentive compatible conjoint ranking mechanism a simple method for making ranking based conjoint analysis incentive compatible is proposed the incentive compatible mechanism involves people purchasing a product profile with a probability proportional to its assigned rank in an empirical application related to consumer preferences for beef attributes we find that the forecasted market share for a new pasture raised steak obtained using incentive compatible rankings was significantly greater than that implied from traditional hypothetical conjoint rankings people s rankings of ground beef products were not affected by the mechanism or by information about pasture raised beef copyright 2008 oxford university press

are political statements only expressive an experiment abstract many forms of political communication are thought to be expressive rather than instrumental we present evidence suggesting the presence of a perceived instrumental benefit of individual political communication subjects may send a sometimes costly comment on another person s choice of how to donate to two rival political groups subjects who may comment before the choice is made when they may have some persuasive impact are more than twice as likely to comment as those who may only send a message after the decision when the timing of the messages pre or post decision remains fixed but the experimenter alone receives the message there is no difference in the proportion of messages sent pre and post decision moreover most of the comments made to the decision maker prior to the decision use an imperative construction while few do so after the decision is made or when writing to the experimenter alone taken together these results indicate that political expression is both expressive and instrumental

hypothetical bias and willingness to accept abstract we design and implement simple laboratory experiments to measure the bias in willingness to pay settings once identified this bias can be corrected or compared to the bias found in comparable willingness to pay settings

effects of cheap talk on consumer willingness to pay for golden rice a large body of literature suggests willingness to pay is overstated in hypothetical valuation questions as compared to when actual payment is required recently cheap talk has been proposed to eliminate the potential bias in hypothetical valuation questions cheap talk refers to process of explaining hypothetical bias to individuals prior to asking a valuation question this study explores the effect of cheap talk in a mass mail survey using a conventional value elicitation technique results indicate that cheap talk was effective at reducing willingness to pay for most survey participants however consistent with previous research cheap talk did not reduce willingness to pay for knowledgeable consumers

information and effort in contingent valuation surveys application to global climate change using national internet samples this contingent valuation study investigates the issues of information access and respondent effort and is based on a series of national internet samples the focus is on a split sample treatment basic information bi versus enhanced information ei in the latter significantly expanded information is provided about global climate change and the kyoto protocol using a referendum format we compare the treatment effect bi versus ei on willingness to pay wtp we develop measures of respondent effort in accessing optional information through the technology of web based surveys and jointly model effort and wtp using a simultaneous estimation approach results support the use of the joint modeling approach for objective measures of respondent effort and wtp respondent effort is shown to be positively and significantly related to wtp however use of the optional menu is rather modest counts of pages and time spent and is highly variable both across pages and respondents

efficient estimation methods for closed ended contingent valuation surveys closed ended contingent valuation surveys can be very useful in the evaluation of nonmarket resources respondents merely state whether they would accept or reject a hypothetical threshold amount either as payment for giving up access to the resource or as a fee for its use the authors develop a maximum likelihood procedure which exploits the variation in the threshold values to allow direct and separate point estimates of regression like slope coefficients and error standard deviations without truncation bias their illustration uses data from a survey of recreational fisherman to examine factors which influence individuals willingness to pay copyright 1987 by mit press

robust multi item newsboy models with a budget constraint abstract in this paper we present robust newsboy models with uncertain demand the traditional approach to describing uncertainty is by means of probability density functions in this paper we present an alternative approach using deterministic optimization models we describe uncertainty using two types of demand scenarios namely interval and discrete scenarios for interval demand scenarios we only require a lower and an upper bound for the uncertain demand of each item while for discrete demand scenarios we require a set of likely demand outcomes for each item using the above scenarios to describe demand uncertainty we develop several minimax regret formulations for the multi item newsboy problem with a budget constraint for the problems involving interval demand scenarios we develop linear time optimal algorithms we show that the corresponding models with discrete demand scenarios are np hard and that they are solvable by dynamic programming finally we extend the above results to the case of mixed scenarios where the demand of some of the items is described by interval scenarios and the demand of the remaining items is described by discrete scenarios

are hypothetical referenda incentive compatible a comment in a recent article in this journal cummings al 1997 offer experimental evidence rejecting the hypothesis that a hypothetical referendum is an incentive compatible mechanism for obtaining the social value of or willingness to pay for changes in the allocation of environmental goods and services while cautions in offering a blanket rejection of hypothetical referenda as a means of measuring economic values on the basis of their findings the authors do suggest that at least in experimental settings respondents appear to behave differently when real money is changing hands wheather hypothetical situations adequately mimic real market situations has been debated in the contigent valuation literature since its inception see cummings brookshire and schulze 1986 cummings et al s finding of incentive incompatibility appears to offer strong evidence for the critics of hypothetical referenda