RT Journal Article
SR Electronic
T1 Modeling Shifts in Willingness to Pay from a Bayesian Updating Perspective
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 308
OP 328
DO 10.3368/le.85.2.308
VO 85
IS 2
A1 Czajkowski, Jeffrey R.
YR 2009
UL http://le.uwpress.org/content/85/2/308.abstract
AB This paper derives a structural shift empirical specification for a double-bound dichotomous choice contingent valuation methodology premised upon willingness-to-pay (WTP) shifts ensuing from a representative model of respondent Bayesian updating behavior. We demonstrate by way of data simulations that a traditional structural shift specification may often fail at estimating true WTP in this context. Further simulations demonstrate that a simple extension of the traditional structural shift model derived explicitly from our Bayesian framework can correct for much of the WTP bias, with an empirical application confirming the simulation outcomes. Finally, we investigate the relationship between strategic behavior and WTP shifts. (JEL Q26, Q50, Q51)