BIASES IN CONTINGENT VALUATION METHOD USED FOR INVESTMENT PROJECT APPRAISAL
BIASES IN CONTINGENT VALUATION METHOD USED FOR INVESTMENT PROJECT APPRAISAL

Author(s): Monika Foltyn-Zarychta
Subject(s): Evaluation research, Financial Markets
Published by: Masarykova univerzita nakladatelství
Keywords: investment appraisal; non-market goods; contingent valuation; bias;
Summary/Abstract: The paper is devoted to theoretical analysis of problems arising in contingent valuation method used in project appraisal for estimating the value of non-market goods. Using hypothetical markets for deriving people’s willingness to pay or willingness to accept compensation for changes in public goods due to project implementation is followed by a number of specific biases that can distort the final outcome of the analysis. Although the literature offers various definitions as well as classifications and ways to overcome those tendencies, some new overview may be seen as indispensable for clarity and efficiency inusing CVM in investment project appraisal procedure.

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