David S. Brookshire

Stated preference methods have been used to value non-market public goods but questions remain about their incentive compatibility. A public goods referendum has proven to be incentive compatible for the more popular contingent valuation method. For attribute based choices, the choice experimental method values goods and services by attribute levels producing marginal values for the economic good. A referendum procedure has been proposed for this attribute based method but it is unclear how its use impacts participant choices. This research develops a controlled laboratory experiment eliciting individual and group responses for two non-market public goods using a referendum format for attribute based choice experiments. Results of the experiments find that a majority referendum rule induces individuals to form responses based upon group perceptions which may lead to non-truthful preference revelation.

We compare individual consumer response between ex ante market data collected by a water utility and ex post experimentally generated data. The experimentally generated data are matched to each participant's water bill history, which predates the experiment. This differentiates our research from prior efforts, which analyze market and experimental data with similar chronologies. For roughly 70% of the participants there is no statistical difference between water demand elasticities estimated using laboratory data and those estimated from market data. Our results provide initial support for the use of experimental procedures to generate missing data regarding hypothetical consumer response. (JEL C9, D12, Q25)