Self-selected intervals in psycho-physic experiments and the measurement of willingness to pay

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See all articles by CERE Center for Environmental and Resource Economics

CERE Center for Environmental and Resource Economics

CERE

Marco Persichina

Swedish University of Agricultural Sciences (SLU) - Department of Forest Economics; Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE)

Bengt Kriström

SLU- Centre for Environmental and Resource Economics (CERE)

Date Written: December 3, 2020

Abstract

Standard elicitation approaches used to obtain quantitative information typically assumes that individuals can provide a precise value. For unfamiliar (as as well as familiar) goods, this is a strong assumption. We suggest they use of self-selected intervals, in which the shortest possible interval is a point, i.e. the standard case. To explore this idea we use a state-of-the-art psychophysics lab experiment (N=60), in which five "focal" sound environments were randomly inserted into a set of 30 pairwise comparisons to elicit the subjective value of reducing ambient noise. We found that valuation uncertainty, measured as the length of a self-selected interval, is independent of the psychophysical conditions. The length of the interval is determined mainly by the subjective value of improving the environment, independent of the level of noise. These results, according to our review of the literature, are new. Interval elicitation enable individuals to provide reasonably consistent rankings of environmental improvements, even if individuals find it difficult to pin down a
precise value. Thus, self-selected interval elicitation seems to have merit.

Keywords: self-selected interval, willingness to pay, elicitation surveys, psychophysics stimuli, sound experiment

JEL Classification: C91, D61, D91, Q59

Suggested Citation

Center for Environmental and Resource Economics, CERE and Persichina, Marco and Kriström, Bengt, Self-selected intervals in psycho-physic experiments and the measurement of willingness to pay (December 3, 2020). Available at SSRN: https://ssrn.com/abstract=

Marco Persichina (Contact Author)

Swedish University of Agricultural Sciences (SLU) - Department of Forest Economics ( email )

S-901 83 Umea
Sweden

Swedish University of Agricultural Sciences (SLU) - Center for Environmental and Resource Economics (CERE) ( email )

Almas Allé 10
Umeå, 750 07
Sweden

Bengt Kriström

SLU- Centre for Environmental and Resource Economics (CERE) ( email )

Umea, 901 83
Sweden
+46-(0)90-7865219 (Phone)

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