A Model of the Anchoring Effect in Dichotomous Choice Valuation with Follow-Up

University of Strasbourg Working Paper No. 2003-07

18 Pages Posted: 17 Jul 2006

See all articles by Sandra Nolte (Lechner)

Sandra Nolte (Lechner)

Lancaster University Management School

Anne Rozan

BETA-UMR, Universite Louis Pasteur, Strasbourg

Francois Laisney

ZEW – Leibniz Centre for European Economic Research

Date Written: July 11, 2006

Abstract

This paper focuses on modelling and estimating the starting point bias in closed-ended follow-up questions, where several bids are presented successively, depending on previous answers. Although the contingent valuation literature took off in the last decade, there is only one study modelling the starting point bias. We propose a new modelling of this anchoring effect based on the assumption the first proposed bid has a direct influence on the individual's willingness-to-pay, i.e respondents modify their willingness-to-pay when presented with the first bid just before they answer the first question. Monte Carlo results support the specification of our model. An application is provided based on data from a contingent valuation study conducted concerning air quality in Strasbourg.

Keywords: Contingent valuation, willingness-to-pay, binary-choice, anchoring effect

JEL Classification: C15, C25, D1, Q0

Suggested Citation

Nolte (Lechner), Sandra and Rozan, Anne and Laisney, Francois, A Model of the Anchoring Effect in Dichotomous Choice Valuation with Follow-Up (July 11, 2006). University of Strasbourg Working Paper No. 2003-07, Available at SSRN: https://ssrn.com/abstract=916483 or http://dx.doi.org/10.2139/ssrn.916483

Sandra Nolte (Lechner) (Contact Author)

Lancaster University Management School ( email )

Lancaster, Lancashire LA1 4YX
United Kingdom

Anne Rozan

BETA-UMR, Universite Louis Pasteur, Strasbourg ( email )

61, avenue de la Foret Noire
Strasbourg, 67000
France
+33 3 90 24 21 06 (Phone)
+33 3 90 24 20 71 (Fax)

Francois Laisney

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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