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1 – 3 of 3Bruno Lanz, Allan Provins, Ian J. Bateman, Riccardo Scarpa, Ken Willis and Ece Ozdemiroglu
We investigate discrepancies between willingness to pay (WTP) and willingness to accept (WTA) in the context of a stated choice experiment. Using data on customer preferences for…
Abstract
We investigate discrepancies between willingness to pay (WTP) and willingness to accept (WTA) in the context of a stated choice experiment. Using data on customer preferences for water services where respondents were able to both ‘sell’ and ‘buy’ the choice experiment attributes, we find evidence of non-linearity in the underlying utility function even though the range of attribute levels is relatively small. Our results reveal the presence of significant loss aversion in all the attributes, including price. We find the WTP–WTA schedule to be asymmetric around the current provision level and that the WTP–WTA ratio varies according to the particular provision change under consideration. Such reference point findings are of direct importance for practitioners and decision-makers using choice experiments for economic appraisal such as cost–benefit analysis, where failure to account for non-linearity in welfare estimates may significantly over- or under-state individual's preferences for gains and avoiding losses respectively.
Danny Campbell, Stephane Hess, Riccardo Scarpa and John M. Rose
The presence of respondents with apparently extreme sensitivities in choice data may have an important influence on model results, yet their role is rarely assessed or even…
Abstract
The presence of respondents with apparently extreme sensitivities in choice data may have an important influence on model results, yet their role is rarely assessed or even explored. Irrespective of whether such outliers are due to genuine preference expressions, their presence suggests that specifications relying on preference heterogeneity may be more appropriate. In this paper, we compare the potential of discrete and continuous mixture distributions in identifying and accommodating extreme coefficient values. To test our methodology, we use five stated preference datasets (four simulated and one real). The real data were collected to estimate the existence value of rare and endangered fish species in Ireland.