Incentive Compatibility and the Consequences When It Is Missing: Experiments with Water Quality Credits Purchase

Incentive Compatibility and the Consequences When It Is Missing: Experiments with Water Quality Credits Purchase

This article implemented four treatments to elicit preferences for a nonmarket good, including (1) a hypothetical referendum, (2) a real referendum lacking incentive compatibility, (3) a real choice with incentive compatibility, and (4) a hybrid approach based on (2) and (3). We develop a method to...

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Veröffentlicht in:Land economics 2021-11, Vol.97 (4), p.893-910
Hauptverfasser: Liu, Pengfei, Swallow, Stephen K
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Sprache:eng
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Compatibility
Referendums
Treatment preferences
Water quality
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container_title Land economics
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creator Liu, Pengfei
Swallow, Stephen K
description This article implemented four treatments to elicit preferences for a nonmarket good, including (1) a hypothetical referendum, (2) a real referendum lacking incentive compatibility, (3) a real choice with incentive compatibility, and (4) a hybrid approach based on (2) and (3). We develop a method to estimate the probability that observed choices do not identify the highest-utility alternative in a choice question. We find that in the hypothetical referendum, the estimated percentage of individuals choosing the alternative that gives the highest utility is the lowest among the treatments. Adding policy consequentiality or payment consequentiality increases the percentage of truthful responses.
doi_str_mv 10.3368/le.97.4.050920-0064R1
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subjects Compatibility
Referendums
Treatment preferences
Water quality
title Incentive Compatibility and the Consequences When It Is Missing: Experiments with Water Quality Credits Purchase
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