Scandinavian Working Papers in Business Administration
Working Papers,
Örebro University, School of Business
No 2009:2: Sensitivity to scope in contingent valuation – introducing a flexible community analogy to communicate mortality risk reductions
Björn Sund ()
Additional contact information
Björn Sund: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden
Abstract: Validity in contingent valuation (CV) is often tested through the sensitivity of estimated willingness to pay (WTP) to the size or quality of a good or service (‘more is better’ and near proportionality). We investigate the performance of two communication aids (a flexible community analogy and an array of dots) in valuing mortality risk reductions for out-of-hospital cardiac arrest. Our results do not support the prediction of expected utility theory, i.e. that WTP for a mortality risk reduction increases with the amount of risk reduction (weak scope sensitivity), for any of the communication aids. In fact, the array of dots even shows a decreasing WTP when the risk reduction is larger. We find some evidence that level of education influences how communication aids are perceived. Also, a larger municipal population results in lower WTP which may signal problems with strategic bias.
Keywords: Contingent valuation; Willingness to pay; Validity; Sensitivity to scope; Risk communication; Community analogy; Cardiac arrest
36 pages, February 3, 2009
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wp-2-2009.pdf
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