Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 13: Do Hypothetical and Actual Willingness to Pay Differ in Choice Experiments? - Application to the Valuation of the Environment

Fredrik Carlsson () and Peter Martinsson ()
Additional contact information
Fredrik Carlsson: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Department of Economics., School of Economics and Commercial Law, Göteborg University, Box 640, SE 40530 GÖTEBORG
Peter Martinsson: Department of Economics,Lund University, Postal: Department of Economics, Lund University Box 7082 , Box 7082 , SE-220 07 Lund, Sweden

Abstract: In this paper we test the validity of choice experiments with donations for environmental projects. In particular, we test whether or not willingness to pay for projects differs between a hypothetical and an actual choice experiment. Our results do not indicate that choice experiments suffer from overstatement in hypothetical willingness to pay; and this contrasts the results found in external tests of validity in Contingent Valuation. In addition, internal tests of validity indicate transitive and stable preferences in both experiments.

Keywords: Choice experiments; External validity; Internal validity; Hypothetical and actual WTP; Public goods

JEL-codes: H41; Q20

19 pages, March 31, 1999

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