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The Effect of Uncertainty on Contingent Valuation Estimates: A Comparison

Sabina Shaikh, Lili Sun and Gerrit van Kooten

No 2005-15, Working Papers from University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group

Abstract: We examine the impact of uncertainty on contingent valuation responses using (1) a survey of Canadian landowners about willingness to accept compensation for converting cropland to forestry and (2) a survey of Swedish residents about willingness to pay for forest conservation. Five approaches from the literature for incorporating respondent uncertainty are used and compared to the traditional RUM model with assumed certainty. The results indicate that incorporating uncertainty has the potential to increase fit, but could introduce additional variance. While some methods for uncertainty are an improvement over traditional approaches, we caution against systematic judgments about the effect of uncertainty on contingent valuation responses.

Keywords: respondent uncertainty; willingness to accept; contingent valuation (search for similar items in EconPapers)
JEL-codes: Q10 Q15 Q23 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-11
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