Abstract

The purpose of this note is to address a problem faced in using stated preference methods to estimate willingness to pay (WTP) for a project. The considered problem occurs under pure altruism. Even though an agent is equipped with well-behaved preferences, a conventional closed-ended (binary) valuation question may induce her to overrate or underrate her true WTP. On the other hand, an open-ended valuation format seemingly provides a correct answer, but such a format fails to be incentive compatible.

Keywords

altruism; closed-ended payment vehicle; distortionary taxation; environmental goods; open-ended payment vehicle; willingness-to-pay

Published in

Journal of Agricultural and Resource Economics
2021, volume: 46, number: 1, pages: 126-133
Publisher: WESTERN AGRICULTURAL ECONOMICS ASSOC

Authors' information