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Abstract

Th􀀁e theoretical and empirical implications of information effects on estimates of existence values (EV) are analyzed using a Household Production model. If households operate in perfect infonnation markets, current practices of providing "policy relevant" or "complete" infonnation to respondents to· Contingent Valuation (CV) surveys may produce larger benefit estimates than should be used in damage assessment and benefit-cost analysis. However, the probable failure of infonnation markets provides a ratiqnale for the provision of infonnation. An empirically applicable rule is derived that detennines the optimal level of infonnation use when estimating existence values. Adopting this methodology would provide an improved decision rule, reinforce the validity and credibility of CVM results, and prom(?te the acceptance of EV and other nonuse values as a desirable componenfof benefit-cost analysis.

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