A Cautionary Note on Tests for Incentive Incompatibility and Starting-Point Bias

David Aadland () and Arthur Josef Caplan ()

No 2003-07, Working Papers from Utah State University, Department of Economics

Abstract: In a recent study by John Whitehead in 2002 (“Incentive Incompatibility and Starting-Point Bias in Iterative Valuation Questions”), he proposes incentive-incompatibility and starting-point-bias tests for iterative willingness-to-pay questions. We show that if restrictions associated with the nature of starting-point bias are not imposed on the estimation, one obtains inconsistent estimates of the structural parameters and may draw inaccurate conclusions regarding the extent of incentive incompatibility and starting-point bias in contingent-valuation survey data.

Keywords: Incentive incompatibility; starting-point bias; contingent valuation (search for similar items in EconPapers)
JEL-codes: Q26 C35 (search for similar items in EconPapers)
Date: Written

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ftp://repec.bus.usu.edu/RePEc/usu/pdf/ERI2003-07.pdf First version, 2003 (application/pdf)

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