Abstract
This chapter focuses on a number current issues in dichotomous choice (DC) contingent valuation experiments. As was explained in the previous chapter, such experiments are characterised by the referendum type of valuation question, where a person is to 'vote' yes or no to a certain project for a suggested cost. Thus, the individual is presented with a dichotomous, rather than continuous , choice when being asked to place a monetary value on an environmental change. The DC-approach was introduced in a seminal article by Bishop and Heberlein (1979) and has more or less replaced the conventional continuous valuation question approach. It's popularity among researchers stems essentially from the inherent 'market resemblance'. A constructed market experiment should mimic a market for private goods as closely as possible in order to simplify the valuation process for the participants. We may note that the DC approach was recommended as the preferred method by the Blue Ribbon panel, headed by Kenneth Arrow and Robert Solow, which was established by the US government to evaluate the use of CV in litigation for damages from oil spills.