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Four experiments investigated the effects of transactional content on temporal and probabilistic discounting of costs. Kusev, van Schaik. Ayton, Dent, and Chater (2009) have shown that content other than gambles can alter decision-making behavior even when associated value and probabilities are held constant. Transactions were hypothesized to lead to similar effects because the cost to a purchaser always has a linked gain, the purchased commodity. Gain amount has opposite effects on delay and probabilistic discounting (e.g., Benzion, Rapoport, & Yagil, 1989: Green. Myerson, & Ostaszewski, 1999), a finding that is not consistent with descriptive decision theory (Kahneman & Tversky, 1979; Loewenstein & Prelec. 1992). However, little or no effect on discounting has been observed for losses or costs. Experiment 1, using transactions, showed parallel effects for temporal and probabilistic discounting: : Smaller amounts were discounted more than large amounts. As the cost rises, people value the commodity more, and they consequently discount less. Experiment 2 ruled out a possible methodological cause for this effect. Experiment 3 replicated Experiment 1. Experiment 4. using gambles, .showed no effect for temporal discounting, because of the absence of the linked gain, but the same effect for probabilistic discounting, because prospects implicitly introduce a linked gain (Green et al., 1999: Prelec & Loewenstein, 1991). As found by Kusev et al. (2009), these findings are not consistent with decision theory and suggest closer attention should be paid to the effects of content on decision making. [ABSTRACT FROM AUTHOR]

Contingent valuation has become one of the dominant methods for valuing nonmarketed environmental goods, as well as for damage assessment due to natural hazards. In this study, the method is applied for evaluating the household willingness to pay for a flood control project in an impoverished periphery of Rio de Janeiro, Brazil. Theoretical validity is analyzed via a binary logistic regression, which describes the impact of sociodemographic, dwelling characteristics, and flood related variables on the willingness to pay for the project. Analysis of content validity indicates a series of characteristics—uncertainty, novelty, lack of well-differentiated values, institutional setting, and entitlement structure—which appear to drastically limit the use of contingent valuation for flood control projects in low income areas of developing countries. The study concludes that the method, in it’s current formulation, is not appropriate for use in policy decisions about flood control investments in areas described by a concentration of low income households in developing countries. [ABSTRACT FROM AUTHOR]