In many instances, Contingent Valuation practitioners rely on voluntary monetary contributions, despite the fact that they are deemed to be neither incentive compatible in theory nor demand revealing in practice. The reason is that they are suitable for most field applications and offer benefits that may outweigh their drawbacks. This paper endeavors to contribute to the literature by exploring the effect of donation payments with differing incentive structures and information levels on contingent values and on respondents' uncertainty regarding the donations declared. To this end, a field survey was conducted using a sample of 332 respondents who were randomly assigned to one of three different mechanisms: (1) individual contribution (hereinafter CVM treatment); (2) individual contribution with provision point mechanism (PPM), where the total cost of the project is unknown (hereinafter PPM treatment); and (3) individual contribution with PPM, where the total cost of the project is known (hereinafter PPM-INF treatment). The results indicate that there are no statistically significant differences in willingness to pay (WTP) estimates between the CVM and PPM treatments nor between the PPM and the PPM-INF treatments. The results also indicate that the PPM has a positive effect on respondents' certainty level, but there is no evidence that the certainty level is affected by the project information cost. The results are mixed compared to previous research efforts. Thus, further tests are necessary in field comparisons and under different information environments before any definite recommendations can be made.
Keywords: Contingent valuation; Free-riding; Groundwater valuation; Hypothetical bias; Provision point mechanisms; Strategic bias.
Copyright © 2017 Elsevier B.V. All rights reserved.