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Effects of payment vehicle non-attendance in choice experiments on value estimates and the WTA–WTP disparity

Mark J. Koetse

Journal of Environmental Economics and Policy, 2017, vol. 6, issue 3, 225-245

Abstract: In this paper, we argue that value estimates obtained from choice experiments suffer from hypothetical bias, caused by part of the respondents ignoring the payment vehicle in making their choices. We show that this particular form of non-attendance can be substantial, pushes down the estimated payment vehicle parameter, and causes an upward bias in value estimates. Moreover, payment vehicle non-attendance affects willingness to accept (WTA) more than it does willingness to pay (WTP). As a consequence, the WTA–WTP disparity decreases when non-attendance is accounted for, with disparities decreasing by at least 50%. The patterns in findings are by and large robust to exclusion of systematic status quo choices and to alternative model specifications.

Date: 2017
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Handle: RePEc:taf:teepxx:v:6:y:2017:i:3:p:225-245