Willingness-to-pay estimates using the double-bounded dichotomous-choice contingent valuation format: A test for validity and precision in a Bayesianframework

The Double-Bounded Dichotomous-Choice (DB-DC) Contingent Valuation format i s thought to yield more precise welfare estimates. Questions remain about i ts validity. The initial bid may represent information with which responden ts update their willingness to pay. A Bayesian model of respondent decision making is estimated for two data sets. The results indicate updating or sh ifts in respondent willingness to pay between iterated valuations. Nonparam etric resting of the welfare estimates reveals that the model incorporating updating yields different values fram the standard model The expected incr eases in the precision of the DB-DC welfare estimates are lost when updatin g occurs. (JEL Q26).