Rationality, Tort Reform and Contingent Valuation: A Classroom Experiment in Starting Point Bias

No 509, Working Papers from College of the Holy Cross, Department of Economics

Abstract: This simple classroom experiment demonstrates the existence of starting point bias. Asked to place a dollar value on a non-market good such as the loss of a limb or the destruction of a wetland, students place a much smaller value on the loss if a small value is first suggested by the questioner while placing a significantly higher value on the loss when a large value is originally suggested. This experiment can be used in theory classes to demonstrate the limits of individual rationality or in applied classes in law or environmental economics in relation to tort reform or contingent valuation.

Keywords: starting point bias; contingent valuation; tort reform; classroom experiment; experimental economics (search for similar items in EconPapers)
JEL-codes: A2 C42 C91 K41 Q51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env, nep-exp and nep-law
Date: Written 2005-06

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http://www.holycross.edu/departments/economics/RePEc/Matheson_StartingPoint.pdf Original version presented at Western Economic Association Meetings, Vancouver, BC, July 2004 (application/pdf)

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