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Exploring Different Assumptions about Outcome-Related Risk Perceptions in Discrete Choice Experiments

Exploring Different Assumptions about Outcome-Related Risk Perceptions in Discrete Choice Experiments
Exploring Different Assumptions about Outcome-Related Risk Perceptions in Discrete Choice Experiments

Environmental outcomes are often affected by the stochastic nature of the environment and ecosystem, as well as the effectiveness of governmental policy in combination with human activities. Incorporating information about risk in discrete choice experiments has been suggested to enhance survey credibility. Although some studies have incorporated risk in the design and treated it as either the weights of the corresponding environmental outcomes or as a stand-alone factor, little research has discussed the implications of those behavioural assumptions under risk and explored individuals’ outcome-related risk perceptions in a context where environmental outcomes can be either described as improvement or deterioration. This paper investigates outcome-related risk perceptions for environmental outcomes in the gain and loss domains together and examines differences in choices about air quality changes in China using a discrete choice experiment. Results suggest that respondents consider the information of risk in both domains, and their elicited behavioural patterns are best described by direct risk aversion, which states that individuals obtain disutility directly from the increasing risk regardless of the associated environmental outcomes. We discuss the implication of our results and provide recommendations on the choice of model specification when incorporating risk.

Air quality, Direct risk aversion, Discrete choice experiment, Outcome-related risk perceptions, Prospect theory
0924-6460
Wu, Hangjian
c2146a4b-1b5f-4b16-a9d9-bf32f7b5ca5a
Mentzakis, Emmanouil
c0922185-18c7-49c2-a659-8ee6d89b5d74
Schaafsma, Marije
937ac629-0fa2-4a11-bdf7-c3688405467d
Wu, Hangjian
c2146a4b-1b5f-4b16-a9d9-bf32f7b5ca5a
Mentzakis, Emmanouil
c0922185-18c7-49c2-a659-8ee6d89b5d74
Schaafsma, Marije
937ac629-0fa2-4a11-bdf7-c3688405467d

Wu, Hangjian, Mentzakis, Emmanouil and Schaafsma, Marije (2021) Exploring Different Assumptions about Outcome-Related Risk Perceptions in Discrete Choice Experiments. Environmental and Resource Economics. (doi:10.1007/s10640-021-00638-x).

Record type: Article

Abstract

Environmental outcomes are often affected by the stochastic nature of the environment and ecosystem, as well as the effectiveness of governmental policy in combination with human activities. Incorporating information about risk in discrete choice experiments has been suggested to enhance survey credibility. Although some studies have incorporated risk in the design and treated it as either the weights of the corresponding environmental outcomes or as a stand-alone factor, little research has discussed the implications of those behavioural assumptions under risk and explored individuals’ outcome-related risk perceptions in a context where environmental outcomes can be either described as improvement or deterioration. This paper investigates outcome-related risk perceptions for environmental outcomes in the gain and loss domains together and examines differences in choices about air quality changes in China using a discrete choice experiment. Results suggest that respondents consider the information of risk in both domains, and their elicited behavioural patterns are best described by direct risk aversion, which states that individuals obtain disutility directly from the increasing risk regardless of the associated environmental outcomes. We discuss the implication of our results and provide recommendations on the choice of model specification when incorporating risk.

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Accepted/In Press date: 26 November 2021
e-pub ahead of print date: 14 December 2021
Published date: 14 December 2021
Additional Information: Publisher Copyright: © 2021, The Author(s).
Keywords: Air quality, Direct risk aversion, Discrete choice experiment, Outcome-related risk perceptions, Prospect theory

Identifiers

Local EPrints ID: 453046
URI: http://eprints.soton.ac.uk/id/eprint/453046
ISSN: 0924-6460
PURE UUID: bed631b6-ea72-44a5-b435-2fb141f04d38
ORCID for Emmanouil Mentzakis: ORCID iD orcid.org/0000-0003-1761-209X
ORCID for Marije Schaafsma: ORCID iD orcid.org/0000-0003-0878-069X

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Date deposited: 07 Jan 2022 17:47
Last modified: 30 Oct 2023 03:04

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Author: Hangjian Wu

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