A contingent valuation study of Winnipeg municipal water quality using bounded rationality

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McComb, Greg
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Contingent valuation (CV) is a survey technique used to value environmental goods not traded in markets, such as improvements to air or water quality. Despite its popularity, widespread acceptance of this methodology has been hampered by controversies stemming from numerous behavioral anomalies such as preference reversals, embedding and starting point bias. This thesis argues that these anomalies are better understood using bounded rationality to model behavior, rather than traditional theories of rationality. To prove this, a conceptual framework is developed which explains the various aspects of bounded rationality. This framework is then applied to a literature review of contingent valuation and related studies, and a CV experiment. The contingent valuation experiment uses a research design with techniques designed to both mitigate and observe these anomalies. A "shopping experience" scenario was constructed; a protocol analysis technique called 'retrospective reporting' was used, and attitude questionsin the survey were used to construct indexes for an econometric model. The environmental good valued was an improvement in Winnipeg municipal water quality that would result if a modern treatment plant was built. (Abstract shortened by UMI.)