Umeå Economic Studies, Department of Economics, Umeå University
No 714:
A new approach for analyzing multiple bounded WTP data - Certainty dependent payment card intervals
Thomas Broberg ()
Abstract: In this paper we analyze the multiple-bounded (MB) format
in which uncertainty is directly incorporated into the WTP question. We
introduce a new approach to estimate mean and median willingness to pay
(WTP) using MB data by allowing respondents to expand their WTP intervals
by shifting their upper bound. Thus, less certain respondents will state a
wider WTP interval. This differs from the Welsh and Poe (1998) approach
(WP) which shifts the entire WTP interval and likely overestimates mean and
median WTP when uncertainty is introduced. To compare empirically our
expansion approach to the WP-approach, we use survey data from 2004 that
elicited WTP for implementation of a predator protection policy in Sweden.
In addition to its more intuitive appeal, our results indicate that the
interval expansion approach better fits the data and provides a smaller
range of estimated WTP. It also with better precision estimates the mean
and median WTP when preference uncertainty is considered, and its estimates
are less sensitive to alternative distributional assumptions.
Keywords: contingent valuation; preference uncertainty; elicitation format; multiple-bounded; payment card; willingness to pay; predators; (follow links to similar papers)
JEL-Codes: C81; Q20; Q26; Q28; (follow links to similar papers)
20 pages, June 7, 2007
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