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A Pseudo-Sequential Choice Model for Valuing Multi-Attribute Environmental Policies or Programs in Contingent Valuation Applications

Published online by Cambridge University Press:  15 September 2016

Dmitriy Volinskiy ,
John C. Bergstrom ,
Christopher M. Cornwell  and
Thomas P. Holmes
Dmitriy Volinskiy
Affiliation:
Department of Rural Economy at the University of Alberta in Edmonton, Alberta, Canada
John C. Bergstrom
Affiliation:
Department of Agricultural and Applied Economics at The University of Georgia in Athens, Georgia
Christopher M. Cornwell
Affiliation:
Department of Economics at The University of Georgia in Athens, Georgia
Thomas P. Holmes
Affiliation:
Southern Research Station of the USDA Forest Service in Research Triangle Park, North Carolina
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Abstract

The assumption of independence of irrelevant alternatives in a sequential contingent valuation format should be questioned. Statistically, most valuation studies treat nonindependence as a consequence of unobserved individual effects. Another approach is to consider an inferential process in which any particular choice is part of a general choosing strategy of a survey respondent. A stochastic model is suggested, consistent with the reflexivity, transitivity, and continuity axioms of utility analysis. An application of this theoretical model to the valuation of watershed ecosystem restoration demonstrates that an empirical model recognizing reflexivity and transitivity, and also allowing for continuity, shows the highest in-sample predictive ability.

Keywords

contingent valuationsequential choicesmodeling approacheswatershed ecosystem service valuation
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 39 , Issue 1 , February 2010 , pp. 9 - 21
Copyright
Copyright © 2010 Northeastern Agricultural and Resource Economics Association 

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