Marek Giergiczny

Learning and Fatigue Effects Revisited: Investigating the Effects of Accounting for Unobservable Preference and Scale Heterogeneity

Using multiple choice tasks per respondent in discrete choice experiment studies increases the amount of available information. However, respondents’ learning and fatigue may lead to changes in observed utility function preference (taste) parameters, as well as the variance in its error term (scale); they need to be controlled to avoid potential bias. A sizable body of empirical research offers mixed evidence in terms of whether these ordering effects are observed. We point to a significant component in explaining these differences; we show how accounting for unobservable preference and scale heterogeneity can influence the magnitude of observed ordering effects. (JEL Q23, Q51)

The influence of cheap talk on willingness-to-pay ranges: some empirical evidence from a contingent valuation study

Different instruments have been developed to mitigate the hypothetical bias in contingent valuation surveys. One, labelled ‘cheap talk’, warns participants about the hypothetical bias phenomenon prior to the valuation question. This paper investigates the effects of cheap talk on willingness-to-pay ranges, in a case study on remote mountain lakes. An open-ended follow-up question is added to a payment ladder to elicit the maximum amount an individual would definitely pay and the minimum amount above which they would definitely refuse to pay. The main conclusion is that cheap talk has no influence on the width of people’s willingness-to-pay range, but is effective at lowering the mean willingness-to-pay.

From Valuation to Governance: Using Choice Experiment to Value Street Trees

This paper reports a choice experiment used to estimate the value of street trees in the city center of Lodz, Poland, and the broader context of how valuation results helped to improve governance of urban ecosystem services in this city. Based on a simplified inventory of trees, we prepared a set of hypothetical programs which put varying emphasis on the different ways to increase the numbers of trees, along with different levels of a hypothetical tax that would have to be paid by respondents to implement a given program. Our study indicated that the 351 surveyed Lodz residents were willing to pay the highest price for greening those streets where currently there are few or no trees and confirmed the general importance of planting trees. The results provided an argument in the debate on the new development strategy for the city and helped to promote the concept of ecosystem services.

Determinants of willingness-to-pay for water pollution abatement: A point and interval data payment card application

This paper shows a contingent valuation exercise of pollution abatement in remote lakes. In addition to estimating the usual interval data model, it applies a point and interval statistical approach allowing for uncensored data, left-censored data, right-censored data and left- and right-censored data to explore the determinants of willingness-to-pay in a payment card survey. Results suggest that the estimations between models may diverge under certain conditions.

Exploring the determinants of uncertainty in contingent valuation surveys

This paper uses the interval data model to explore the determinants of uncertainty in two-way payment ladder and in multiple-bounded uncertainty choice surveys. It estimates the uncertainty function that relates the size of the willingness-to-pay range to explanatory variables, where one of them is a proxy of the actual willingness-to-pay. The combination of the interval data model and the inclusion of the proxy variable present some advantages over the ordinary least square estimations currently used in the literature. In particular, it reduces the risk of the omitted variable bias and it takes into account that the dependent variable is not fully observed.

Social preferences for fuel break management programs in Spain: a choice modelling application to prevention of forest fires

This article reports on an economic valuation study of alternative fire prevention programs in the province of Malaga, southern Spain. The main aim of this study was to explore the social preferences for several forest fire prevention management issues. Fuel break programs were presented that differed in terms of cleaning technique (controlled grazing, prescribed burning and mechanical treatments), design (from traditional linear unshaded fire breaks to more landscape and environmentally friendly structures, such as shaded fuel breaks) and density (linked to annual burnt area). RESULTS show that the population was clearly interested in the potential of the proposed programs to reduce fire. Lessons learnt from this study could be relevant for the development of fire prevention policies and specific prevention campaigns in Mediterranean forests.

Individual level models vs. sample level models: contrasts and mutual benefits

With a view to better capturing heterogeneity across decision makers and improving prediction of choices, there is increasing interest in estimating separate models for each person. Almost exclusively, this work has however taken place outside the field of transport research. The aim of the present paper is twofold. We first wish to give an account of the potential benefits of a greater focus on individual level estimates in transport applications. Secondly, we wish to offer further insights into the relative benefits of sample level and individual level models (ILMs) by drawing on a data set containing an unusually large number (144) of decisions on holiday travel per individual. In addition to comparing existing approaches, we also put forward the use of a novel technique which draws on the relative benefits of both sample level and ILMs by estimating ILMs in a Bayesian fashion with priors drawn from a sample level model. Our results show only limited differences between ILMs and conditionals from sample level models when working with the full set of choices. When working with more realistic sample sizes at the person level, our results suggest that ILMs can offer better performance on the estimation data but that this is a result of overfitting which can lead to inferior prediction performance. Our proposed Bayesian ILM model offers good intermediary performance. The use of best-worst data rather than simple stated choice, as is done commonly in published ILM work, does not lead to major changes to these findings.

Pirates in the Lab: Using Incentivized Choice Experiments to Explore Preference for (Un)Authorized Content

We report a laboratory experiment aimed at investigating factors affecting choice between different versions of a full-length movie. In particular, we estimate the willingness to pay for a legal, rather than pirated copy and compare it to the impact of such characteristics as picture quality or delay in delivery. We find a modest but highly significant preference for the authorized version. By conducting otherwise identical choice experiments both with and without actual experiential and monetary consequences, we conclude that the method does not seem to suffer from hypothetical bias. We also find that when the proceeds from legal sale are transferred to a good cause, willingness to pay for the unauthorized copy is reduced.

Conservation of disappearing cultural landscape’s biodiversity: are people in Belarus willing to pay for wet grassland restoration?

Abandonment of traditional farming practices, such as hay-making and pasturing, has resulted in rapid loss of open wet grassland habitats in Europe. The globally threatened Aquatic Warbler (Acrocephalus paludicola L.) is a bird species that occurs almost exclusively in open fen mires, which have virtually disappeared in Western Europe, but still persist locally in Eastern Europe. Focusing on the world’s most important breeding site for Aquatic Warbler, the Zvaniec fen mire in Belarus, we estimated Belarusian citizens’ willingness-to-pay for adequate conservation management of this fen mire and its focal species the Aquatic Warbler. Results from a discrete choice experiment indicated that Belarusian citizens were willing to pay for appropriate conservation programmes of the Zvaniec fen mire. Scything and mechanical mowing were preferred compared to controlled burning, and especially over herbicide treatment of encroaching shrubs. Conservation management was preferred over legal protection of wetland areas without management. Respondents considered such passive conservation to be insufficient to maintain open fen mire habitat and gave a higher priority to active conservation management programmes. These preferences are consistent with evidence-based knowledge about what is effective conservation management for the Aquatic Warbler. Given the gradual disappearance of Europe’s traditional cultural landscapes, we discuss the challenge to fund the maintenance of this biocultural biodiversity legacy.