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Does money talk? — The effect of a monetary attribute on the marginal values in a choice experiment

Aravena, C.; Martinsson, P.; Scarpa, R.

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Authors

C. Aravena

P. Martinsson



Abstract

When designing choice experiments for nonmarket valuation the role of the price attribute is of major importance. In the energy sector the uncertainty of future direction of changes in prices makes it difficult to include an adequate price vector in the design. We separately investigate the implication of using price vectors with increases and decreases in tariffs from current levels, on marginal value estimate from choice experiment data developed using prospect theory. In addition, we also analyse the effect of excluding the price vector on these marginal values. By and large, our results support the neoclassical theory as we find that the means of the conditional estimates of the marginal values of attributes are unaffected by the direction of the price change and from exclusion of the price attribute. However, the distributions show a larger spread of values when the choice experiment implies a tariff decrease, which may have policy implications.

Citation

Aravena, C., Martinsson, P., & Scarpa, R. (2014). Does money talk? — The effect of a monetary attribute on the marginal values in a choice experiment. Energy Economics, 44, 483-491. https://doi.org/10.1016/j.eneco.2014.02.017

Journal Article Type Article
Acceptance Date Feb 22, 2014
Publication Date Jul 1, 2014
Deposit Date Jan 21, 2015
Publicly Available Date Feb 4, 2016
Journal Energy Economics
Print ISSN 0140-9883
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 44
Pages 483-491
DOI https://doi.org/10.1016/j.eneco.2014.02.017
Keywords Choice experiment, Prospect theory, Wind power.
Public URL https://durham-repository.worktribe.com/output/1416569

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