Bounded rationality in contingent valuation: empirical evidence using cognitive psychology
ثبت نشده
چکیده
Survey based valuation techniques like the Contingent Valuation Method (CVM) rely particularly on the premise of respondents' rationality when answering willingness to pay (WTP) questions. Results of CVM surveys have repeatedly put this fundamental assumption into question. This study adopts a more realistic view of rationality accounting for respondents' limited capacities to process information. Based on cognitive psychology a technique to detect and analyze the bounds of rationality inherent in WTP statements is developed. Using an empirical example, the influence of bounded rationality on the validity of CVM results is analyzed. It is shown that individual differences in information processing play a major role for the validity of CVM responses. The results allow new insights into response behavior in dichotomous-choice versus payment card elicitation formats. From the results of this study recommendations for future survey designs taking into account respondents' different information processing modes are developed.
منابع مشابه
Ethical Motives and Charitable Contributions in Contingent Valuation: Empirical Evidence from Social Psychology and Economics
Contingent valuation of the environment has proven popular amongst environmental economists in recent years and has increased the role of monetary valuation in public policy. However, the underlying economic model of human psychology fails to explain why certain types of stated behaviour are observed. Thus, good scope exists for interdisciplinary research in the area of economics and psychology...
متن کاملThe Bounded Rationality Bias in Managerial Valuation of Real Options: Theory and Evidence from IT Projects
Although real options theory normatively suggests that managers should associate such real options with project value, little field research has been conducted to test whether they suffer from systematic biases in doing so. We draw on the notion of bounded rationality in managerial decision making to explore this understudied phenomenon. Using data collected from managers in 88 firms, we show t...
متن کاملA Bayesian Test of Double Bounded Contingent Valuation
Double bounded dichotomous choice is a contingent valuation elicitation method which involves two iterated binary questions. Past research has compared both responses within the framework of a joint bivariate distribution. In this paper we propose a Bayesian test which allows us to prove the hypothesis of unitary correlation coefficient. The application of the test is conducted on empirical dat...
متن کاملAssessing the Conservation Value of Rig Ishaqabad Rangeland of Sirjan Using Contingent Valuation Method
Rangelands are one of the most important natural resources of Iran in terms of its vastness and ecosystem values. Therefore, in this research, the conservation value of Rig Ishaqabad, Sirjan county, Kerman province, rangeland has been estimated using the One- and- One- Half- Bounded Dichotomous Conditional Valuation method. Influential factors on willingness of individuals payment for protect t...
متن کاملEmotional arousal as a source of bounded rationality
This paper proposes an alternative psychological explanation for bounded rationality. According to Herbert Simon, bounded rationality arises from human cognitive limitations. Following the suggestion of institutional economist John R. Commons, I argue that extremes in emotional arousal also contribute to bounded rationality. This idea is formalized and developed using the Yerkes± Dodson law fro...
متن کامل