DEVELOPING A DEMAND REVEALING MARKET CRITERION FOR CONTINGENT VALUATION VALIDITY TESTS

Past research suggests that contingent valuation overstates demand for public goods. These estimates of hypothetical bias are probably invalid since they rely on voluntary contributions mechanisms which fail to reveal demand. An improved mechanism is shown to reveal aggregate demand in controlled experiments. However, individual contributions deviate from induced value. Key Words: contingent valuation, voluntary contributions, provision point, experiments JEL Codes: H41, C92, Q2