In a recent article in this Journal, Cummings et al. (1997) offer experimental evidence rejecting the hypothesis that a hypothetical referendum is an incentive-compatible mechanism for obtaining the social value of, or willingness to pay for, changes in the allocation of environmental goods and services. While cautious in offering a blanket rejection of hypothetical referenda as a means of measuring economic values on the basis of their findings, the authors do suggest that at least in experimental settings respondents appear to behave differently when real money is changing hands. Whether hypothetical situations adequately mimic real-market situations has been debated in the contingent valuation literature since its inception (see Cummings, Brookshire, and Schultze 1986). Cummings et al.'s finding of incentive incompatibility appears to offer strong evidence for the critics of hypothetical referenda.
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