Abstract

The aim of this paper is to propose a new approach for capturing, interpreting and characterizing valuation uncertainty in contingent valuation studies. It is proposed that even if the respondents know their utility functions (i.e., they have no uncertainty about their utility functions), the utility they derive from one quantity of a good can vary within a given interval. Hence it is proposed that valuation uncertainty could be due to the fact that people have an interval of utility, or a utility set, for a quantity of a good, rather than only one point, which is generally presumed. This approach is supported by Ariely et al. (2003) and their empirical findings of coherent arbitrariness. A new open-ended willingness to pay (WTP) question designed to reveal valuation uncertainty is presented. The question mode, and the interpretation and characterization of the revealed valuation uncertainty, provide additional insight into valuation uncertainty and could be useful as a starting point for further research

Keywords

coherent arbitrariness; contingent valuation; open-ended; preference uncertainty; valuation uncertainty

Published in

Publisher: Institutionen för Skogsekonomi

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