IDEAS home Printed from https://ideas.repec.org/p/ags/aaea08/6477.html
   My bibliography  Save this paper

Incentive Compatibility in an Attribute-Based Referendum Model

Author

Listed:
  • Racevskis, Laila A.
  • Lupi, Frank

Abstract

The manner in which WTP survey responses are elicited has received much attention in the nonmarket valuation literature because of the potential bias that may be introduced via alternate response formats. One issue of particular concern is that of incentive compatibility. Several studies have concluded that response formats that present a series of valuation questions are not incentive compatible. While the single dichotomous choice elicitation format reduces the amount of information collected, multiple-bounded elicitation formats may yield biased, unreliable results. Understanding this trade-off can help provide better information on response formats that will elicit incentive compatible responses and therefore provide realistic and policy-relevant information. This research investigates the effect of the number of multinomial choices presented to respondents in an attribute-based referendum (ABR) format on incentive compatibility of responses. Data was collected from two versions of a mail survey that used an attribute-based description of a hypothetical forest easement program in Michigan's Upper Peninsula and a referendum-style choice between the status quo and various forest easement program scenarios. The first version of the survey presented four choice scenarios to respondents while the second version presented only one choice scenario. Results suggest that the multiple-bound response format improves statistical efficiency due to the statistical significance of all estimated parameters. However, this efficiency may also overestimate WTP. The single-bounded response format displays lower statistical efficiency but may reflect more accurate preferences from respondents. Results lead to a rejection of the hypothesis that the number of choices presented to respondents has no effect on results and have implications for the reliability of nonmarket valuation information from multiple-bound response formats in attribute-based referenda models.

Suggested Citation

  • Racevskis, Laila A. & Lupi, Frank, 2008. "Incentive Compatibility in an Attribute-Based Referendum Model," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6477, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6477
    DOI: 10.22004/ag.econ.6477
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/6477/files/469603.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.6477?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nick Hanley & Robert Wright & Vic Adamowicz, 1998. "Using Choice Experiments to Value the Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 413-428, April.
    2. Timothy C. Haab & Ju-Chin Huang & John C. Whitehead, 1999. "Are Hypothetical Referenda Incentive Compatible? A Comment," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 186-196, February.
    3. Boxall, Peter & Rollins, Kimberly & Englin, Jeffrey, 2003. "Heterogeneous preferences for congestion during a wilderness experience," Resource and Energy Economics, Elsevier, vol. 25(2), pages 177-195, May.
    4. Boxall, Peter C. & Adamowicz, Wiktor L. & Swait, Joffre & Williams, Michael & Louviere, Jordan, 1996. "A comparison of stated preference methods for environmental valuation," Ecological Economics, Elsevier, vol. 18(3), pages 243-253, September.
    5. Cummings, Ronald G & Elliott, Steven & Harrison, Glenn W & Murphy, James, 1997. "Are Hypothetical Referenda Incentive Compatible?," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 609-621, June.
    6. Daniel McFadden, 1994. "Contingent Valuation and Social Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 689-708.
    7. Adamowicz, Wiktor L. & Boxall, P.C. & Louviere, J.J., 1994. "Stated Preference Methods for Environmental Valuation," Staff Paper Series 232558, University of Alberta, Department of Resource Economics and Environmental Sociology.
    8. Bateman, Ian J. & Burgess, Diane & Hutchinson, W. George & Matthews, David I., 2008. "Learning design contingent valuation (LDCV): NOAA guidelines, preference learning and coherent arbitrariness," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 127-141, March.
    9. Taylor, Laura O. & McKee, Michael & Laury, Susan K. & Cummings, Ronald G., 2001. "Induced-value tests of the referendum voting mechanism," Economics Letters, Elsevier, vol. 71(1), pages 61-65, April.
    10. Kevin J. Boyle & Richard C. Bishop & Michael P. Welsh, 1985. "Starting Point Bias in Contingent Valuation Bidding Games," Land Economics, University of Wisconsin Press, vol. 62(2), pages 188-194.
    11. Robert Mitchell, 2002. "On Designing Constructed Markets in Valuation Surveys," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 297-321, June.
    12. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
    13. John C. Whitehead, 2002. "Incentive Incompatibility and Starting-Point Bias in Iterative Valuation Questions," Land Economics, University of Wisconsin Press, vol. 78(2), pages 285-297.
    14. Anthony Burton & Katherine Carson & Susan Chilton & W. Hutchinson, 2007. "Resolving questions about bias in real and hypothetical referenda," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 513-525, December.
    15. Frank Lupi & Michael D. Kaplowitz & John P. Hoehn, 2002. "The Economic Equivalency of Drained and Restored Wetlands in Michigan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(5), pages 1355-1361.
    16. Thomas P. Holmes & Kevin J. Boyle, 2005. "Dynamic Learning and Context-Dependence in Sequential, Attribute-Based, Stated-Preference Valuation Questions," Land Economics, University of Wisconsin Press, vol. 81(1).
    17. Jeff Bennett & Russell Blamey (ed.), 2001. "The Choice Modelling Approach to Environmental Valuation," Books, Edward Elgar Publishing, number 2028.
    18. Stevens, T. H. & Belkner, R. & Dennis, D. & Kittredge, D. & Willis, C., 2000. "Comparison of contingent valuation and conjoint analysis in ecosystem management," Ecological Economics, Elsevier, vol. 32(1), pages 63-74, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gabriela Scheufele & Jeff Bennett, 2013. "Effects of alternative elicitation formats in discrete choice experiments," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(2), pages 214-233, April.
    2. McNair, Ben J. & Bennett, Jeff & Hensher, David A., 2011. "A comparison of responses to single and repeated discrete choice questions," Resource and Energy Economics, Elsevier, vol. 33(3), pages 554-571, September.
    3. McCartney, Abbie & Cleland, Jonelle, 2010. "Choice Experiment Framing and Incentive Compatibility: observations from public focus groups," Research Reports 107575, Australian National University, Environmental Economics Research Hub.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    2. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
    3. Nicolas Jacquemet & Alexander James & Stéphane Luchini & Jason F. Shogren, 2017. "Referenda Under Oath," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 479-504, July.
    4. Day, Brett & Pinto Prades, Jose-Luis, 2010. "Ordering anomalies in choice experiments," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 271-285, May.
    5. Boyle, Kevin J. & Morrison, Mark & Taylor, Laura O., 2004. "Why Value Estimates Generated Using Choice Modelling Exceed Contingent Valuation: Further Experimental Evidence," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58370, Australian Agricultural and Resource Economics Society.
    6. Aravena, Claudia & Hutchinson, W. George & Carlsson, Fredrik & Matthews, David I, 2015. "Testing preference formation in learning design contingent valuation (LDCV) using advanced information and repetitivetreatments," Working Papers in Economics 619, University of Gothenburg, Department of Economics.
    7. Bateman, Ian J. & Burgess, Diane & Hutchinson, W. George & Matthews, David I., 2008. "Learning design contingent valuation (LDCV): NOAA guidelines, preference learning and coherent arbitrariness," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 127-141, March.
    8. Jesús Barreiro-Hurlé & José Gómez-Limón, 2008. "Reconsidering Heterogeneity and Aggregation Issues in Environmental Valuation: A Multi-attribute Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(4), pages 551-570, August.
    9. McNair, Ben J. & Hensher, David A. & Bennett, Jeff, 2010. "Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a latent class approach," MPRA Paper 23427, University Library of Munich, Germany.
    10. Nguyen, Thanh Cong & Le, Hoa Thu & Nguyen, Hang Dieu & Ngo, Mai Thanh & Nguyen, Hong Quang, 2021. "Examining ordering effects and strategic behaviour in a discrete choice experiment," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 394-413.
    11. Daniel McFadden, 2009. "The human side of mechanism design: a tribute to Leo Hurwicz and Jean-Jacque Laffont," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 77-100, April.
    12. Jin, Jianjun & Wang, Zhishi & Ran, Shenghong, 2006. "Comparison of contingent valuation and choice experiment in solid waste management programs in Macao," Ecological Economics, Elsevier, vol. 57(3), pages 430-441, May.
    13. Schwarzinger, Michaël & Carrat, Fabrice & Luchini, Stéphane, 2009. ""If you have the flu symptoms, your asymptomatic spouse may better answer the willingness-to-pay question": Evidence from a double-bounded dichotomous choice model with heterogeneous anchori," Journal of Health Economics, Elsevier, vol. 28(4), pages 873-884, July.
    14. F Alpizar & F Carlsson & P Martinsson, 2003. "Using Choice Experiments for Non-Market Valuation," Economic Issues Journal Articles, Economic Issues, vol. 8(1), pages 83-110, March.
    15. Lloyd-Smith, Patrick & Adamowicz, Wiktor, 2018. "Can stated measures of willingness-to-accept be valid? Evidence from laboratory experiments," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 133-149.
    16. Day, Brett & Bateman, Ian J. & Carson, Richard T. & Dupont, Diane & Louviere, Jordan J. & Morimoto, Sanae & Scarpa, Riccardo & Wang, Paul, 2012. "Ordering effects and choice set awareness in repeat-response stated preference studies," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 73-91.
    17. Collins, Jill P. & Vossler, Christian A., 2009. "Incentive compatibility tests of choice experiment value elicitation questions," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 226-235, September.
    18. Catalina M. Torres Figuerola & Antoni Riera Font, 2009. "Defining environmental attributes as external costs in choice experiments: A discussion," CRE Working Papers (Documents de treball del CRE) 2009/1, Centre de Recerca Econòmica (UIB ·"Sa Nostra").
    19. Haghani, Milad & Bliemer, Michiel C.J. & Hensher, David A., 2021. "The landscape of econometric discrete choice modelling research," Journal of choice modelling, Elsevier, vol. 40(C).
    20. Michaël Schwarzinger & Fabrice Carrat & Stéphane Luchini, 2009. ""If you have the flu symptoms, your asymptomatic spouse may better answer the willingness-to-pay question". Evidence from a double-bounded dichotomous choice model with heterogeneous anchori," Post-Print inserm-00636179, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea08:6477. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.