Criterion validity tests of the contingent valuation methods with market/non-market comparisons of hypothetical bias and willingness to pay estimates compared with paired comparison estimates of willingness to accept

This dissertation investigates the sources of hypothetical bias and differences between willingness to pay and willingness to accept in contingent valuation methods. It reports the findings of two separate experiments with six independent treatments, all of which utilizes the same private good (art print). Hypothetical and actual cash WTP are elicited with both open-ended and dichotomous choice (DC) question formats, which are compared for differences in hypothetical bias. The effectiveness of a reminder statement (requesting that respondents not report what they thought a fair market price was and to act as if they were in a real market) in eliminating hypothetical bias in both question formats is tested. The DC data are tested for starting point bias. WTP measures elicited with the DC question format are compared with WTA measures elicited with the method of paired comparison, which involves having individuals make binary choices between receiving a particular good or a sum of money and inferring WTA from the ranking of dollar amounts and the good of interest. WTP and hypothetical bias are compared for those in the market and those not in the market for art prints.;The reminder was not successful in eliminating hypothetical bias in the open-ended treatments; however, a market/non-market comparison indicates that it was successful in eliminating any significant hypothetical bias for those in the market for art prints and those not in the market but not for those who neither agreed nor disagreed that they were in the market.;Those in the market and those not in the market come from two separate populations with distinct WTP behaviors and should not be combined in one sample. Those not in the market caused skewness in our samples because their bids were either zero or very low. Thus non-parametric tests are analyzed in depth and unique applications are presented.;No significant difference between hypothetical (with reminder ) and actual cash WTP was found in the raw DC data, and no starting point bias was found in the logit estimated data. The method of paired comparison was found to violate fundamental microeconomic axioms of rational behavior.