Preference Elicitation Methods and Valuation Implications: Experimental Evidence from Valuation and Purchase of Water Quality Credits

This paper compares different preference elicitation methods used in choice ex- periments. We implemented four different methods to elicit individuals’ preference for a non-market good. Our four treatments include (1) a hypothetical referen- dum, (2) a real referendum lacking incentive compatibility, (3) a real choice with incentive compatibility and (4) a hybrid approach that combines (2) and (3). We develop a method to estimate the percentage of strategic choices in each treatment. We find that in the hypothetical referendum, about 75% to 92% individuals truth- fully reveal their preference and choose the option that gives the highest utility in a choice question. Adding policy consequentiality (e.g., the real referendum) and payment consequentiality (e.g., the hybrid approach) could increase the percentage of individuals truthfully reveal their preference.

Issue Date:
May 25 2016
Publication Type:
Conference Paper/ Presentation
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JEL Codes:
Q56; Q57; C72
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 Record created 2017-04-01, last modified 2019-08-30

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