Measuring individuals' valuation distributions using a stochastic payment card approach

Abstract Instead of assuming that each individual has a single point value for a good or service in her mind, we believe that an individual's valuation of an environmental quality improvement is best viewed as a random variable with an associated distribution. To measure individuals' valuation distributions, we propose a contingent valuation elicitation procedure based on a stochastic payment card approach that presents each respondent with numerical likelihood that the respondent would agree to pay a specified amount in order to implement an environmental improvement plan. An empirical pilot study was conducted in Sofia, Bulgaria to illustrate the implementation of this stochastic payment card and to contrast it with the traditional referendum elicitation procedure. In this pilot study the results obtained using the stochastic payment card approach are significantly lower than those obtained from the referendum model.