Article
Fat Tails and Truncated Bids in Contingent Valuation: An Application to An Endangered Shorebird Species
Ecological Economics
(2016)
Abstract
A yes-response function in a contingent valuation study is said to have fat tails if it has a high and slowly declining yes-response rate at high bid levels. Truncated bids refer to the practice of dropping high bid offers before a yes-response rate of near zero is reached. This is a common practice in contingent valuation. We explore the extent and implications of fat tails and truncated bids in a study of an endangered shorebird species. We find, among other things, that mean willingness to pay is quite sensitive to the highest bid offered -- so much so that the choice of highest bid nearly dictates outcomes.
Keywords
- Contingent Valuation,
- Fat Tails
Disciplines
Publication Date
Summer June 5, 2016
Citation Information
George R Parsons and Kelley H Myers. "Fat Tails and Truncated Bids in Contingent Valuation: An Application to An Endangered Shorebird Species" Ecological Economics Vol. 129 (2016) p. 210 - 219 Available at: http://works.bepress.com/george_parsons/40/