Bound and path effects in double and triple bounded dichotomous choice contingent valuation

Dichotomous choice contingent valuation questions are relatively inefficien t in that large sample sizes are required for a given level of estimation p recision. An increasingly common approach to this problem is to supplement the initial question with subsequent dichotomous choice questions in a mult iple-bound design. However, a number of commentators have suggested that su ch designs may generate responses which are internally inconsistent in that the distribution of underlying preferences implied by answers to the initi al question may not be the same as that implied by the entire sequence of r eplies. We consider a variety of potential causes of such inconsistencies a nd use data from a contingent valuation study with two follow-ups and post survey debriefing focus groups to test both the effects caused by moving fr om one bound to another and those caused when respondents follow either the bid-increasing path generated by a positive response at a given bid amount , or the bid-decreasing path generated by negative responses. Results indic ate that both bound and path effects are significant and generate a pattern corresponding to certain of the causes of inconsistency identified in the paper. Conclusions for the future application of such designs are presented . (C) 2001 Elsevier Science B.V. All rights reserved.