budget processes and commitment to fiscal discipline abstract we present a framework of investigation into the political economy of the budget process our model suggests that institutional rules governing the budget process can be found to limit the importance of fiscal illusion empirical evidence supports that proposition the choice of rules depends on the political environment as well as the dominant source of uncertainty in the budget process

stacking low carbon policies on the renewable fuels standard economic and greenhouse gas implications this paper examines the economic and ghg implications of stacking a low carbon fuel standard lcfs with and without a carbon price policy on the renewable fuel standard rfs we compare the performance of various policy combinations for food and fuel prices fuel mix and fuel consumption we also analyze the economic costs and benefits of alternative policy combinations and their distributional effects for consumers and producers in the transportation and agricultural sector in the us using a dynamic multi market partial equilibrium model of the transportation and agricultural sectors we find that combining the rfs with an lcfs policy leads to a reduction in first generation biofuels and an increase in second generation biofuels compared to the rfs alone this policy combination also achieves greater reduction in ghg emissions even after considering offsetting market mediated effects imposition of a carbon price with the rfs and lcfs policy primarily induces fuel conservation and achieves larger ghg emissions reduction compared to the other policy scenarios all these policy combinations lead to higher net economic benefits for the transportation and agricultural sectors relative to the no policy baseline because they improve the terms of trade for us

substitution effects in cvm values there is increasing recognition that statistical estimates of the average willingness to pay for environmental programs may be biased by the failure of respondents or of the statistical methodology to consider the effect of substitute programs and goods we design and implement a cvm survey that estimates the impact of substitution effects on the willingness to pay for an environmental program we find a statistically significant impact and suggest that the set of potential substitutes is very large

vertically summing public good demand curves an empirical comparison of economic versus political jurisdictions fiscal equivalence for efficient provision of a public good requires perfect correspondence between political and economic jurisdictions however the spatial extent of the economic jurisdiction is an empirical question drawing on four survey based valuation studies we measure the relative public good benefit gradient as a function of residential location from six natural resource public goods the results indicate commonly used state political jurisdictions reflect an average of 13 of total benefits in the economic jurisdiction although with a logarithmic form for distance the upper confidence interval of state benefits can include 100 for some species

estimation of distance decay functions to account for substitution and spatial heterogeneity in stated preference research in a site selection choice experiment various hypotheses are tested related to spatial heterogeneity in willingness to pay wtp for environmental improvements spatial heterogeneity is measured through distance decay effects substitute sites inside and outside the experiment s choice set and spatial trend variables we demonstrate that distance decay functions differ between users and nonusers and across study sites also the distance to substitutes outside the choice set explains spatial variation in wtp we show that further extending the model with spatial trend variables reveals additional spatial heterogeneity in choices accounting for spatial heterogeneity patterns results in significantly different wtp estimates for environmental improvements jel q25 q51

erratum standards versus standards the effects of different pollution restrictions when economists refer to pollution standards they almost universally mean uniform restrictions on pollution emissions e g william j baumol and wallace e oates 1975 ch 13 susan rose ackerman 1973 david besanko 1978 however in practice standards take many forms not only emissions restrictions but restrictions on pollution per unit of output or per unit of an input restrictions on the use of a polluting input or mandated use of a particular pollution control technology these specifications of regulations will have a variety of effects on a firm s resource allocation decisions for instance allowing pollution per unit of output as the standard instead of directly restricting the level of pollution gives the firm some choice in addition to reducing pollution it can increase its output to dilute the pollution this paper examines the effects of five different forms of pollution standards on input decisions the level of production and firm profits the results show that the different standards by providing firms with different incentives change the firm s allocation decisions and affect the relative profitability of the standards section i reviews the existing literature on the incentives of different instruments the following section describes the model to be used five different forms of pollution constraints are individually examined in section iii using a graphical approach their relative effects as well as some special cases are assessed in section iv finally section v raises the case of different standards when firms are not identical

modeling spatial patchiness and hot spots in stated preference willingness to pay stated preference analyses often impose strong assumptions regarding spatial welfare distributions that can influence the validity of welfare analysis and aggregation these include spatial homogeneity and continuous distance decay global assumptions such as these are increasingly questioned by non economics disciplines in favor of approaches that allow for local patchiness drawing from this literature this article proposes methods to identify and evaluate hot spots in stated preference welfare estimates using local indicators of spatial association methods are illustrated using geocoded choice experiment data addressing river restoration results suggest the presence of statistically significant non continuous patterns overlooked by current approaches

substitution effects in the valuation of multiple environmental programs abstract a theoretical framework for understanding substitution and complementary effects between environmental programs is derived a multiple program valuation function is specified and its structure analyzed a maximum likelihood estimator is derived to estimate the parameters of the valuation function using referendum type contingent valuation data the empirical analysis shows that the conventional benefit aggregation approach of independent valuation and summation overstates the benefits of two and three program policies by an average of 24 and 54 respectively

achieving california s 80 greenhouse gas reduction target in 2050 technology policy and scenario analysis using ca times energy economic systems model the ca times optimization model of the california energy system v1 5 is used to understand how california can meet the 2050 targets for greenhouse gas ghg emissions 80 below 1990 levels this model represents energy supply and demand sectors in california and simulates the technology and resource requirements needed to meet projected energy service demands the model includes assumptions on policy constraints as well as technology and resource costs and availability multiple scenarios are developed to analyze the changes and investments in low carbon electricity generation alternative fuels and advanced vehicles in transportation resource utilization and efficiency improvements across many sectors results show that major energy transformations are needed but that achieving the 80 reduction goal for california is possible at reasonable average carbon reduction cost 9 to 124 tonne co2e at 4 discount rate relative to a baseline scenario availability of low carbon resources such as nuclear power carbon capture and sequestration ccs biofuels wind and solar generation and demand reduction all serve to lower the mitigation costs but ccs is a key technology for achieving the lowest mitigation costs

the aggregation of environmental benefit values welfare measures distance decay and total wtp abstract we review the literature regarding the aggregation of benefit value estimates for non market goods two case studies are presented through which we develop an approach to aggregation which applies the spatial analytic capabilities of a geographical information system to combine geo referenced physical census and survey data to estimate a spatially sensitive valuation function these case studies show that the common reliance upon political rather than economic jurisdictions and the use of sample mean values within the aggregation process are liable to lead to significant errors in resultant values we also highlight the fact that for resources with use values then we should expect overall values to reduce with increasing distance from such sites but that changes in the choice of welfare measure will determine whether such distance decay is to be expected within values stated by those who are presently non users the paper concludes by providing recommendations for future improvements to the methodology

the effect of distance on willingness to pay values a case study of wetlands and salmon in california most contingent valuation studies in the literature utilized a pre determined geographic market area for their sample frame in other words they did not include variables that would measure the extent of the geographic areas over which to aggregate willingness to pay these studies implicitly assumed that the effects of geographic distance were moot an assumption that could have led to an understatement of the aggregate benefit values computed in these studies the overall goal of this study was to determine if distance affects willingness to pay for public goods with large non use values the data used came from a contingent valuation study regarding the san joaquin valley ca respondents were asked about their willingness to pay wtp for three proposed programs designed to reduce various environmental problems in the valley a logit model was used to examine the effects of geographic distance on respondents willingness to pay for each of the three programs results indicate that distance affected wtp for two of the three programs wetlands habitat and wildlife and the wildlife contamination control programs we calculate the underestimate in benefits if the geographic extent of the public good market is arbitrarily limited to one political jurisdiction

complements substitutes budget constraints and valuation this study employs a multi program contingent valuation cvm design tosimultaneously assess the value of three ecosystem conservation programsin alberta canada the design is different from most other cvm designsand has several different features including the natural incorporation ofdirect reminders of substitute complementary programs and budgetconstraints in contrast to the findings of other studies two of the environmentalprograms appear to be complements and other combinations of the programssuggest an absence of substitution effects the multi program model ismore informative and robust in terms of theoretical validity and expectedrelationships with demographic and recreational characteristics of therespondents

some inconvenient truths about climate change policy the distributional impacts of transportation policies abstract climate policy has favored costly measures that implicitly or explicitly subsidize lowcarbon fuels we simulate four transportation sector policies cap and trade cat ethanol subsidies a renewable fuel standard rfs and a lowcarbon fuel standard our simulations confirm that alternatives to cat are 2 5 to 4 times more costly but are amenable to adoption due to right skewed distributions of gains we analyze voting on the waxman markey wm cat bill conditional on a district s cat gains a district s rfs gains are negatively correlated with the likelihood of voting for wm our analysis supports campaign contributions as a partial mechanism

directional heterogeneity in distance profiles in hedonic property value models abstract in environmental economics hedonic property value hpv models have often employed distance from a localized environmental disamenity as a proxy for perceived risk the magnitude of a distance effect on housing prices however may depend upon the direction in which it is being measured we generalize conventional distance models to allow for continuously varying directional effects by converting from cartesian to polar coordinates a simple empirical example for housing prices around woburn massachusetts between 1988 and 1996 illustrates how failure to allow for directional heterogeneity can obscure otherwise statistically significant distance effects in hpv

a review of low carbon fuel policies principles program status and future directions a low carbon fuel standard lcfs is a market based policy that specifies declining standards for the average lifecycle fuel carbon intensity afci of transportation fuels sold in a region this paper i compares transportation fuel carbon policies in terms of their economic efficiency fuel price impacts greenhouse gas emission reductions and incentives for innovation ii discusses key regulatory design features of lcfs policies and iii provides an update on the implementation status of lcfs policies in california the european union british columbia and oregon the economics literature finds that an intensity standard implicitly taxes emissions and subsidizes output the output subsidy results in an intensity standard being inferior to a carbon tax in a first best world although the inefficiency can be corrected with a properly designed consumption tax or mitigated by a properly designed carbon tax or cap and trade program in california from 2011 to 2015 the share of alternative fuels in the regulated transportation fuels pool increased by 30 and the reported afci of all alternative fuels declined 21 lcfs credit prices have varied considerably rising to above 100 credit in the first half of 2016 lcfs programs in other jurisdictions share many features with california s but have distinct provisions as well c 2016 elsevier ltd all rights reserved

implications of market mediated emissions and uncertainty for biofuel policies abstract biofuel policies affect global agricultural and oil commodity markets whose response has consequences for greenhouse gas ghg emissions estimates of the net ghg impact of biofuel policies are wide ranging and shrouded in uncertainty we perform a monte carlo experiment using a stylized model of the global liquid fuel market and compare different biofuel policies with respect to global ghg emissions and global oil consumption taking iluc emissions into consideration we find that for the currently commercial biofuels inclusion of iluc emissions as part of the policy rating of biofuels ghg intensity i likely leads to lower emissions ii leads to greater reduction in both domestic and global oil consumption iii leads to higher price of fuels in the home region all compared to when iluc emissions are excluded from the policy rating and iv does not however ensure that emissions absolutely decline owing to fuel market effects which unlike iluc are presently excluded from all existing fuel ghg regulations sensitivity analysis suggests that iluc emissions and the price elasticity of oil supply are the greatest contributors to variance in net global ghg emissions under any given policy

regulation by prices quantities or both a review of instrument choice choosing appropriate policy instruments is an important part of successful regulation once objectives are agreed and suitable targets adopted policy makers can employ command and control regulation and or economic instruments and choose between fixing a price or a quantity this paper examines the relative advantages of price quantity and hybrid instruments according to their efficiency under uncertainty the trade off between credible commitment and flexibility implementation international considerations and political economy various illustrations of the theory are provided with two detailed applications to climate change and transport policy specifically congestion and safety pricing

second best biofuel policies and the welfare effects of quantity mandates and subsidies abstract the quest for biorenewable energy sources is held to justify a number of government interventions including support policies for biofuels such as those responsible for the recent rapid growth of us ethanol production this article provides an analytical assessment of such policies we construct a general equilibrium open economy model that captures the rationale typically invoked to justify government intervention in this setting to alleviate the environmental impact of energy consumption and to decrease us energy dependence on foreign sources the model is used to study both the positive and normative implications of alternative policy instruments including the subsidies and mandates specified by the 2007 energy independence and security act from a positive perspective we find that biofuels mandates are equivalent to a combination of fuel taxes and biofuels subsidies that are revenue neutral from a welfare perspective we show that biofuels mandates dominate biofuels subsidies and that combining fuel taxes with mandates would be welfare enhancing

the case for a new fiscal constitution for the first 140 years of u s history the federal budget was effectively constrained by two fiscal rules the formal limits within the constitution on the enumerated spending powers and an informal rule that the government could borrow only during recessions and wars at the end of the 1920s federal expenditures were 2 6 percent of gnp the federal debt was constrained to about equal to 16 percent of gnp the general price level was roughly stable over this long period over the past six decades however federal expenditures have increased to nearly 25 percent of gnp larger and more frequent budget deficits have increased the federal debt held by the public to an amount equal to about 50 percent of gnp and the general price level is now about nine times the level at the beginning of this period this dramatic change in fiscal and monetary conditions occurred without one amendment to the constitution to authorize a change in the fiscal rules our effective fiscal constitution has been transformed into one in which congress and the president may authorize any type or amount of expenditures and taxes subject only to the voting rules for routine legislation how did this happen should economists be concerned about this change in the fiscal constitution what if anything should be done about it

cheap talk with two audiences these problems have in common a simple structure an informed sender says something to two interested but uninformed receivers who then take actions based on their beliefs these actions affect the sender as well as the receivers in this paper we study how costless nonverifiable claims cheap talk can affect these beliefs and hence the actions and how the incentives for truthful revelation to one receiver are affected by the presence of the other we then ask how welfare is affected by whether claims are made in public or in private as some of the above examples suggest public messages may be more credible than private messages addressed to either audience one possibility is that the presence of one audience can discipline the sender s relationship with the other we call this one sided

expecting the unexpected emissions uncertainty and environmental market design we study potential equilibria in california s cap and trade market for greenhouse gases ghgs based on information available before the market started we find large ex ante uncertainty in business as usual emissions and in the abatement that might result from non market policies much larger than the reduction that could plausibly occur in response to an allowance price within a politically acceptable range this implies that the market price is very likely to be determined by an administrative price floor or ceiling similar factors seem likely to be present in other cap and trade markets for ghgs

the economics of split ticket voting in representative democracies in u s elections voters often vote for candidates from different parties for president and congress voters also express dissatisfaction with the performance of congress as a whole and satisfaction with their own representative the authors develop a model of split ticket voting in which government spending is financed by uniform taxes the benefits from this spending are concentrated while the model generates split ticket voting overall spending is too high only if the president s powers are limited overall spending is too high in a parliamentary system the authors model can be used as the basis of an argument for term limits copyright 1997 by american economic association

do the personal characteristics of finance ministers affect changes in public debt using a unique dataset of the personal characteristics of national finance ministers in western europe 1980 2010 i show that a finance minister s experience affects the national debt to gdp ratio the increase in the debt to gdp ratio is smaller if the finance minister stays in office for an additional year this result is robust to the inclusion of the personal characteristics of prime ministers and a measure of political stability however the magnitude of the effect is sensitive to how finance ministers are selected in the econometric model when more than one minister holds office during a particular year the estimation of interaction terms further reveals that experience particularly matters in election years or in times of negative gdp growth because an experienced finance minister has the power to restrict the usual increase in the debt to gdp ratio in contrast a finance minister s educational background and ideological leaning have no significant impact on the debt to gdp ratio

substitution effects and spatial preference heterogeneity in single and multiple site choice experiments a novel discrete choice experiment dce design allows testing of substitution effects based on the framing of and distances to substitute sites the same ecosystem services and biodiversity provided at different sites are valued independently in single site dces and simultaneously in a multiple site dce using an identical experimental design site specific utility functions are estimated with and without controlling for spatial preference heterogeneity framing choices as alternative projects at single or multiple sites significantly influences substitutability between sites choice behavior and welfare estimates distance decay displays significant heterogeneity in different directions from the valued sites and between urban and rural areas

induced innovation and energy prices this paper uses u s patent data from 1970 to 1994 to study the impact of energy prices on energy efficient innovations theories of technological change have focused both on demand side factors which spur innovative activity by increasing the value of new innovations and supply side factors such as scientific advancements that make new innovations possible data on demand side factors are easily obtained but data on supply side factors that influence innovation are not readily available this paper uses patent citations as a measure of the usefulness of the existing base of scientific knowledge citations to previous patents are used to construct productivity estimates which measure the usefulness of the existing stock of knowledge to inventors in a given energy field for any given year these estimates are then combined with data on demand side factors to estimate a model of induced innovation in energy technologies the results indicate that both energy prices and the supply of knowledge have strongly significant positive effects on innovation the paper concludes with a discussion of the implication of this work for environmental policy

budgetary devices for curbing spending prone ministers and bureaucrats in this paper i study asimple game of the budgetary process thegame has three players a spending proneminister who proposes a budget a primeminister who accepts or vetoes and abureaucrat who provides non verifiableinformation about policy the bureaucratis appointed by the spending minister ishow that in this setting public spendingis excessive this result stems from theproposal power of the minister and hisincentive to appoint a spending pronebureaucrat next i examine two devices forcontrolling public spending binding budgettargets imposed by the prime minister anddelegating veto power to a spending aversefinance minister it is shown that thelatter device is more effective than theformer device to curb a spending proneminister because it not only reduces theproposal power of the spending minister but also induces him to appoint lessspending prone bureaucrats

learning and signalling by advisor selection in this paper we consider a model where a policy maker uses advice in order to 1 obtain information about the consequences of an innovation information motive and 2 to support political legitimacy of her decision persuasion motive we conduct our analysis in the context of a cheap talk game with three players 1 a policy maker 2 the median voter in parliament or of the electorate and 3 an advisor the advisor has private information about the consequences of policy communication between an advisor and a recipient improves as their preferences are closer aligned if the preferences of the policy maker and the median voter are different the policy maker faces a trade off on the one hand she wants to gain information to judge whether the innovation is worthwhile on the other hand she needs to convince the median voter whether the innovation is desirable

directional heterogeneity in wtp models for environmental valuation many studies in the stated preference literature on environmental valuation do not include the effects of substitutes and distance in willingness to pay wtp models in spite of the relevance of these effects in aggregation and benefit transfer heterogeneity in the availability of substitutes over space may cause multidirectional distance effects in wtp as a result disregarding this spatial heterogeneity may lead to biased estimators of the distance effect and associated wtp values cameron 2006 in this paper we demonstrate that distance decay is subject to significant directional effects which tend to be related to differences in the availability of substitutes across the study area we apply a straightforward methodology to account for such spatial heterogeneity in choice experiments and assess the effect on wtp for improvements in ecosystem services in a lake district we model distance decay effects whilst controlling for heterogeneity between users and non users and non use related wtp reasons the directional effects result in significantly different wtp estimates different market sizes reflecting the population with positive wtp and differences in total wtp up to 32

the context for substitutes in cvm studies some empirical observations abstract the purpose of this paper is to report results from a set of experiments that provide data to test the noaa 13 panel recommendation that subjects be reminded of budgetary substitutes when providing values the results suggest that simply reminding subjects of alternative environmental goods does not affect the distribution of values for a specific good such values are affected however whenever subjects simultaneously value alternative goods

partisan cycles in congressional elections and the macroeconomy in the postwar united states the president s party has always done worse in the midterm congressional elections than in the previous congressional election republican administrations exhibit below average and democratic administrations above average economic growth in the first half of each term whereas in the latter halves the two see equal growth our rational expectations model is consistent with these two regularities in presidential elections voters choose between two polarized candidates they then use midterm elections to counterbalance the president s policies by strengthening the opposition in congress since presidents of different parties are associated with different policies our model predicts a spurious correlation between the state of the economy and elections our predictions contrast with those of retrospective voting models in which voters reward the incumbent if the economy is doing well before the election our model performs empirically at least as well as and often better than alternative models

fuel price impacts and compliance costs associated with the renewable fuel standard rfs abstract us policy instruments concerning vehicle biofuels are currently being revisited for example as part of an on going annual renewable fuel standard rfs implementation the environmental protection agency epa requests stakeholder feedback analysis of programmatic effects including impacts on gasoline diesel prices and compliance costs motivated by the need for regulatory specific feedback a novel regional market model is developed that quantifies price impacts across different regional markets for a number of market variables including several types of compliance certificates known as renewable identification numbers rins an analysis of the most recent epa proposal suggests that the d4 biodiesel rin price could rise to 1 00 rin sensitivity results show that the d4 rin price is highly sensitive to soybean oil prices while d5 d6 rin prices are most sensitive to the volume of e85 consumed it was found that the projected costs associated with the rfs in 2017 could be reduced by approximately 50 if an additional 600 million gallons of e85 were consumed the analysis also suggests that the rfs does not dramatically affect the retail price of either gasoline and diesel fuels paid by consumers

effects on welfare measures of alternative means of accounting for preference heterogeneity in recreational demand models multiattribute revealed preference data are used to investigate heterogeneity in a sample of kayakers for a panel of whitewater sites in ireland this article focuses on a comparison of preference heterogeneity using a random parameter logit model with correlated tastes and a latent class model in terms of the implications for welfare measures of environmental quality and site access changes recreationalists skill levels are found to affect preferences in both approaches statistics for the estimated distribution of welfare changes for the average respondent are computed for changes in site attributes but contrary to previous work these are found to be of similar magnitude

emissions taxes versus intensity standards second best environmental policies with incomplete regulation the best emissions tax or emissions cap may be an inferior instrument under incomplete regulation leakage without leakage an intensity standard regulating emissions per unit of output is inferior due to an implicit output subsidy this inefficiency can be eliminated by an additional consumption tax with leakage an intensity standard can dominate the optimal emissions tax since the implicit output subsidy prevents leakage the addition of a consumption tax improves an intensity standard s efficiency may prevent leakage and may be efficient comparing intensity standards to output based updating shows that the latter dominates if updating is sufficiently flexible

a tale of two market failures technology and environmental policy abstract market failures associated with environmental pollution interact with market failures associated with the innovation and diffusion of new technologies these combined market failures provide a strong rationale for a portfolio of public policies that foster emissions reduction as well as the development and adoption of environmentally beneficial technology both theory and empirical evidence suggest that the rate and direction of technological advance is influenced by market and regulatory incentives and can be cost effectively harnessed through the use of economic incentive based policy in the presence of weak or nonexistent environmental policies investments in the development and diffusion of new environmentally beneficial technologies are very likely to be less than would be socially desirable positive knowledge and adoption spillovers and information problems can further weaken innovation incentives while environmental technology policy is fraught with difficulties a long term view suggests a strategy of experimenting with policy approaches and systematically evaluating their success

on market mediated emissions and regulations on life cycle emissions abstract we analyze the use of life cycle assessment lca as a regulatory tool using biofuel regulations as an illustrative example a regulatory context calls for a consequential lca clca of a policy as opposed to an attributional lca alca of a product in performing clca issues of scale price effects technology and policy in the counterfactual state of the world strategic behavior policy horizon etc need consideration this appears to increase both uncertainty in estimates and the cost of performing lca we suggest heuristics for determining vulnerability to harmful indirect effects at an early stage in the policy process and discuss alternative policies to limit harmful indirect effects without engaging in the full effort of computation and selection of a central estimate for uncertain outcomes

policy shocks and market based regulations evidence from the renewable fuel standard the renewable fuel standard mandates large increases in u s biofuel consumption and is implemented using tradable compliance credits known as rins in early 2013 rin prices soared causing the regulator to propose reducing future mandates we estimate empirically the effect of three policy shocks that reduced the expected mandates in 2013 we find that the largest of these shocks decreased the value of the fuel industry s 2013 compliance obligation by 7 billion we then study the effects of the shocks on commodity markets and the market value of publicly traded biofuel firms results show that the burden of the mandate reductions fell primarily on advanced biofuel firms and commodity markets of the marginal compliance biofuel we argue that the policy shocks reduced the incentive to invest in the technologies required to meet the future objectives of the rfs and discuss alternative policy designs to address the problems that arose in 2013

alternative transportation fuel standards welfare effects and climate benefits this paper develops an integrated model of the fuel and agricultural sectors to analyze the welfare and greenhouse gas emission ghg effects of the existing renewable fuel standard rfs a low carbon fuel standard lcfs and a carbon price policy the conceptual framework shows that these policies differ in the incentives they create for the consumption and mix of different types of biofuels and in their effects on food and fuel prices and ghg emissions we also simulate the welfare and ghg effects of these three policies which are normalized to achieve the same level of us ghg emissions by promoting greater production of food crop based biofuels the rfs is found to lead to a larger reduction in fossil fuel use but also a larger increase in food prices and a smaller reduction in global ghg emissions compared to the lcfs and carbon tax all three policies increase us social welfare compared to a no biofuel baseline scenario due to improved terms of trade even when environmental benefits are excluded global social welfare increases with a carbon tax but decreases with the rfs and lcfs due to the efficiency costs imposed by these policies even after including the benefits of mitigating ghg emissions

incentive compatibility tests of choice experiment value elicitation questions abstract this paper uses laboratory experiments with induced values to address fundamental issues related to the incentive compatibility of choice experiment value elicitation questions in particular we compare two versus three option choice sets and the effect of using alternative provision rules including one where the outcome is influenced by both participant and regulator votes we find the overall proportion of choices that are inconsistent with induced preferences is rather low however there are more deviations from induced preferences for two option choice sets and for alternatives to a simple plurality vote implementation rule a multinomial probit analysis of choices in tandem with a mixed logit welfare analysis suggests there is a statistically significant but modest degree of bias towards selecting the status quo option