Decoy Effects in Choice Experiments and Contingent Valuation: Asymmetric Dominance
Bateman, Munro and Poe take the decoy effect into choice experiments and contingent valuation, the methods used to value goods that have no market price. A dominated choice is one in which an option loses on every relevant dimension; an asymmetrically dominated choice arises where at least two options do not dominate each other and one, but not both, dominates a third. The authors demonstrate that introducing such an asymmetrically dominated option can significantly affect choices between the non-dominated options within the same choice set for non-market goods, and further that this effect translates into significant impacts on the valuations subsequently placed on those options. This vault cites it as evidence that the effect operates where attributes genuinely are numerical, which is the territory the sceptical literature says it belongs in, and as a warning about a method used to set public policy.
Bateman, Munro and Poe take the decoy effect into choice experiments and contingent valuation, the methods used to value goods that have no market price. A dominated choice is one in which an option loses on every relevant dimension; an asymmetrically dominated choice arises where at least two options do not dominate each other and one, but not both, dominates a third. The authors demonstrate that introducing such an asymmetrically dominated option can significantly affect choices between the non-dominated options within the same choice set for non-market goods, and further that this effect translates into significant impacts on the valuations subsequently placed on those options. This vault cites it as evidence that the effect operates where attributes genuinely are numerical, which is the territory the sceptical literature says it belongs in, and as a warning about a method used to set public policy.
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Bateman, I. J., Munro, A., & Poe, G. L. (2008). 'Decoy effects in choice experiments and contingent valuation: asymmetric dominance.' Land Economics, 84(1), 115-127. Introducing an asymmetrically dominated option significantly affected choices between non-dominated options and translated into significant impacts on subsequent valuations. doi:10.3368/le.84.1.115
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- The Option You Were Never Meant to Buy, Why We Act
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The source
https://doi.org/10.3368/le.84.1.115
DOI: 10.3368/le.84.1.115