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Internal Consistency in Double Bounded Dichotomous Choice Contingent Valuation: Use of Explicit Decision Rules and Sequential and Advance Revelation Learning Design (LDCV). Claudia D. Aravena Novielli* a Fredrik Carlsson b W. George Hutchinson a Dave Matthews a.
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Internal Consistency in Double Bounded Dichotomous Choice Contingent Valuation: Use of Explicit Decision Rules and Sequential and Advance Revelation Learning Design (LDCV) Claudia D. Aravena Novielli*a Fredrik Carlsson b W. George Hutchinson a Dave Matthews a a. Queen’sUniversity Belfast b. University of Gothenburg Camp Resources XVII Wilmington, June 24-25, 2010
Introduction Double Bounded Dichotomous Choice Contingent Valuation Anomalies Differences between SB – DB (SBDBDiff) Advance Revelation Explicit Decision Rules
YES YY WTP 1000? YES NO YN WTP 500? YES NY WTP 250? NO NO NN Introduction • Elicitation Format: Double Bounded Referendum
Background • Hannemann et al.1991 popularized DBDC while recognize the DBDCDiff (MWTPSB > MWTPDB). • Carson et al 2009 and Deshazo 2002 outline 7 explanations for the SBDBDiff. • Carson et al. 2009 describes the Difference as stereotypical facts • JEEM 2008 following Matthews et al. 2003 develops a simple test for the significance of the SBDBDiff using resampling methods.
Introduction • JEEM 2008 SBDBDiff reduces in repeated valuations by Institutional Learning (LDCV). • JEEM 2004 Introduce Advance Revelation. We use this to effect Institutional Learning and find SBDBDiff is reduced (ARLD). • We combine Advance Revelation with repeated valuations affecting more reduction in SBDBDiff • JEEM 2009 in a lab experiment used a Decision Rule to clarify outcomes of the second vote and removed SBDBDiff. • In a field CVM we combine Advance Revelation with the Decision Rule and test removal SBDBDiff.
Design of the Study • Contingent Valuation Method • Frame: WTP for Renewable Energy sources • Sequential valuations with 2 baselines: • Renewable Energies instead of Hydropower • Renewable Energies instead of Fossil Fuels. • 3 Split Samples Treatments: (1100 interviews) • Sample 1: Control treatment • Sample 2: Advance Revelation (AR) treatment • Sample 3: Advance Revelation + Decision Rule treatment (DR)
Design of the Study and Hypotheses SBDBDiff > >
Design of the Study and Hypotheses SBDBDiff > >
Objective • Re test LDCV (reduction in the SBDBDiff ) and SE ? • We test if Advance Revelation Learning in isolation and combine with LDCV reduces SBDBDiff and SE? • We test if the Decision Rule (JEEM 2009) further attenuates SBDBDiff and SE?
QUESTIONNAIRE • SCENARIO • Brief description of the current energy situation of Chile. • Presentation and description of the hydropower projects in Chilean Patagonia (Patagonia, location of projects and impacts). • Presentation and description of the renewable energy sources and its impacts . • First Valuation task • Description of the fossil fuel sources and its impacts. • Presentation and description of the renewable energy sources and its impacts . • Second Valuation task
Advance Revelation on Valuation Sequence • In producing the 15% extra electricity required in Chile we are looking at how much more you would be willing to pay for this renewables alternative over the two other types of energy. In what follows you will be asked how you would vote if a referendum was held to choose between renewable energy and each of the other alternatives.
Advance Revelation on DB Institution • Because the exact cost of the projects is not known today, we will ask you to vote on 2 different costs for each project. These costs represent the range into which the actual cost should fall. • In what follows, you will vote for or against each alternative. You are asked how you would vote if the good could be provided at one of the two cost. This is followed directly by a second vote on how you would vote if the good could be provided at the second of the two costs.
Decision Rule • Now imagine that the cost to you was $________ (Higher/Lower price) and the outcome of this second vote replaces that of the first vote, so that if a majority vote “Yes” in favour of the proposal the renewable energy projects are developed and if a majority vote “No” the Patagonian dams project will go ahead. We will not ask you to vote again at another cost on this proposal. Would you vote Yes or No?
Conclusions • JEEM 2008 and 2009 looks only at significant SBDBDiff . • This study also considers effect of AR, DR and LDCV on SE like the American literature. • As in JEEM 2008, the SE on first SB valuation is several magnitude greater than other SE. • AR appears to be almost same reduction in SBDBDIFF and SE as a repeated valuation in LDCV. • Adding DR to AR greatly reduces the SBDBDIFF in the first valuation but even more in the second valuation and it takes out the strategically behavior.
Thanks for your attention Questions Contact Details: Claudia Aravena caravena02@qub.ac.uk
