An Inferred Valuation Method

Abstract

Although estimates of people’s values for public goods are often needed to conduct costbenefit analysis, existing value elicitation methods are prone to a number of well-documented biases. We argue that some of these biases result because people derive utility from the act of <i>saying</i> they are willing to pay for a good. To counteract this phenomenon, we consider an approach that asks people to predict or infer <i>others’</i> values for a good instead of asking people to state their own value. Both a conceptual model and results from a laboratory experiment lend support for the new approach. <i>(JEL H41, Q51)</i>