Question

Problem 1: Benefit Estimation Methods Please clearly label each statement True or False and explain your reasoning. a) Revealed preference techniques can be used to estimate non-use value (e.g., existence value). b) Unlike revealed preference techniques, stated preference techniques are immune to “behavioral” phenomena (e.g., hyperbolic discounting). c) Revealed preference and stated preference techniques should be used jointly when possible.

Answer 1

ANSWER:

(a). Reveal preference can be use to estimate the use value of a commodity. because the use value of a commodity has the tangible features of that commodity which can satisfy some human requirement, wants or need. Whereas, non use value of a good refers to the value that people can assign even if they never have and never will use it. Therefore such non use value of a commodity does not satisfy human wants. therefore the statement is false.  

(b) Both the Reveal preference approach and stated preference approach are helpless to explain behavioral phenomena. Therefore, the statement is False.

(c) Both the theories depends on different assumptions. Therefore, utilization of different advantage estimation strategies can give increasingly solid outcomes to strategy producers and so both the techniques should be used jointly when possible. the statement is True.