EMBEDDING EFFECTS - STIMULUS REPRESENTATION AND RESPONSE-MODE

The contingent valuation (CV) methodology assigns prices to environmen tal amenities by asking people bow much they would be willing to pay i n order to preserve or acquire those amenities. If this measurement pr ocedure is valid, then responses should be sensitive to relevant chang es in the amenities being judged and insensitive to irrelevant changes . One apparent demonstration of inappropriate insensitivity is the emb edding effect: the observation that people are apparently willing to p ay the same amount of money for a good as for a minor subset of that g ood. This study examined the possibility that the source of this effec t lies with each of two (potentially treatable) methodological problem s: 1) subjects have difficulty using quantitative (dollar) response mo des to express their values; and 2) subjects have difficulty absorbing the essential details of the CV scenarios describing those goods. The study found that 1) subjects showed considerable embedding both with a simple paired-comparison response mode and with a more demanding one requiring direct dollar estimates; 2) embedding was much reduced with the simpler response mode; 3) subjects' preferences with the two resp onse modes were usually inconsistent; 4) when asked to describe the CV scenario that they had just heard, subjects often reported key task d etails inaccurately; and 5) there was less embedding when tasks were r einterpreted in terms of the questions subjects reported having answer ed (as opposed to what had actually been asked). These results are dis cussed in terms of the match between the questions that investigators would like to ask and the ones that subjects are capable of answering.