Incentive Compatibility in an Attribute-Based Referendum Model

The manner in which WTP survey responses are elicited has received much attention in the nonmarket valuation literature because of the potential bias that may be introduced via alternate response formats. One issue of particular concern is that of incentive compatibility. Several studies have concluded that response formats that present a series of valuation questions are not incentive compatible. While the single dichotomous choice elicitation format reduces the amount of information collected, multiple-bounded elicitation formats may yield biased, unreliable results. Understanding this trade-off can help provide better information on response formats that will elicit incentive compatible responses and therefore provide realistic and policy-relevant information. This research investigates the effect of the number of multinomial choices presented to respondents in an attribute-based referendum (ABR) format on incentive compatibility of responses. Data was collected from two versions of a mail survey that used an attribute-based description of a hypothetical forest easement program in Michigan's Upper Peninsula and a referendum-style choice between the status quo and various forest easement program scenarios. The first version of the survey presented four choice scenarios to respondents while the second version presented only one choice scenario. Results suggest that the multiple-bound response format improves statistical efficiency due to the statistical significance of all estimated parameters. However, this efficiency may also overestimate WTP. The single-bounded response format displays lower statistical efficiency but may reflect more accurate preferences from respondents. Results lead to a rejection of the hypothesis that the number of choices presented to respondents has no effect on results and have implications for the reliability of nonmarket valuation information from multiple-bound response formats in attribute-based referenda models.Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,

Valuing Forest Ecosystem Services: A Comparison of the Effects of Attitudes and Demographic Characteristics on Willingness to Pay

Environmental Economics and Policy,

Cooperation Costs and the Economics of Intergovernmental Partnerships

Increasingly, state and local governments are promoting intergovernmental coordination, cooperation, and/or outright consolidation (3Cs) based on the perceived economies of scale advantages of such joint actions. However, the growing public finance and political science literature on interregional cooperation highlights the fact that transactions or other cooperation costs may preclude the realization of economies of scale benefits. Despite this evidence, some proponents go as far as to view such collaborative actions as effective policy tools for enhancing regional economic development and competitiveness. The role of cooperation costs and their relationship to economies of scale are not well documented in the literature. This paper develops a framework for evaluating the implications of cooperation costs for the effectiveness of intergovernmental collaborations. A simple cost function model is used to explain the costs and challenges associated with managing coordinated, cooperative, and consolidated relationships and the dynamic nature of such costs The analysis highlights the importance of such things as degree of complexity, inter-party diversity, and the relative sizes of collaborating partners

Incentive Compatibility in an Attribute-Based Referendum Model

The manner in which WTP survey responses are elicited has received much attention in the nonmarket valuation literature because of the potential bias that may be introduced via alternate response formats. One issue of particular concern is that of incentive compatibility. Several studies have concluded that response formats that present a series of valuation questions are not incentive compatible. While the single dichotomous choice elicitation format reduces the amount of information collected, multiple-bounded elicitation formats may yield biased, unreliable results. Understanding this trade-off can help provide better information on response formats that will elicit incentive compatible responses and therefore provide realistic and policy-relevant information. This research investigates the effect of the number of multinomial choices presented to respondents in an attribute-based referendum (ABR) format on incentive compatibility of responses. Data was collected from two versions of a mail survey that used an attribute-based description of a hypothetical forest easement program in Michigan's Upper Peninsula and a referendum-style choice between the status quo and various forest easement program scenarios. The first version of the survey presented four choice scenarios to respondents while the second version presented only one choice scenario. Results suggest that the multiple-bound response format improves statistical efficiency due to the statistical significance of all estimated parameters. However, this efficiency may also overestimate WTP. The single-bounded response format displays lower statistical efficiency but may reflect more accurate preferences from respondents. Results lead to a rejection of the hypothesis that the number of choices presented to respondents has no effect on results and have implications for the reliability of nonmarket valuation information from multiple-bound response formats in attribute-based referenda models