Learning design contingent valuation (LDCV): NOAA guidelines, preference learning and coherent arbitrariness

• Published in: Journal of environmental economics and management Vol. 55; no. 2; pp. 127 - 141
• Main Authors: Bateman, Ian J., Burgess, Diane, Hutchinson, W. George, Matthews, David I.
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01.03.2008; Elsevier; Elsevier Science Publishing Company, Inc
• Series: Journal of Environmental Economics and Management
• Subjects: Animal rights; Animal welfare; Coherent arbitrariness; Contingent valuation; Economic models; Environmental economics; Federal regulation; Instructional design; Learning; NOAA guidelines; Non-market goods; Preferences; Revealed preferences; Similarity; Studies; Valuation; Valuation methods; Willingness to pay (WTP); Willingness-to-pay; United States > US; Willingness to pay (WTP); D12; Similarity; Q51; Learning; D6; Non-market goods; Coherent arbitrariness; Q18; Animal welfare; Preferences; C51; NOAA guidelines; Contingent valuation
• ISSN: 0095-0696; 1096-0449
• DOI: 10.1016/j.jeem.2007.08.003

We extend the contingent valuation (CV) method to test three differing conceptions of individuals’ preferences as either (i) a-priori well-formed or readily divined and revealed through a single dichotomous choice question (as per the NOAA CV guidelines [K. Arrow, R. Solow, P.R. Portney, E.E. Leamer, R. Radner, H. Schuman, Report of the NOAA panel on contingent valuation, Fed. Reg. 58 (1993) 4601–4614]); (ii) learned or ‘discovered’ through a process of repetition and experience [J.A. List, Does market experience eliminate market anomalies? Q. J. Econ. (2003) 41–72; C.R. Plott, Rational individual behaviour in markets and social choice processes: the discovered preference hypothesis, in: K. Arrow, E. Colombatto, M. Perleman, C. Schmidt (Eds.), Rational Foundations of Economic Behaviour, Macmillan, London, St. Martin's, New York, 1996, pp. 225–250]; (iii) internally coherent but strongly influenced by some initial arbitrary anchor [D. Ariely, G. Loewenstein, D. Prelec, ‘Coherent arbitrariness’: stable demand curves without stable preferences, Q. J. Econ. 118(1) (2003) 73–105]. Findings reject both the first and last of these conceptions in favour of a model in which preferences converge towards standard expectations through a process of repetition and learning. In doing so, we show that such a ‘learning design CV’ method overturns the ‘stylised facts’ of bias and anchoring within the double bound dichotomous choice elicitation format.