Self-selected intervals in psycho-physic experiments and the measurement of willingness to pay

Standard elicitation approaches used to obtain quantitative information typically assume that individuals can provide a precise value. For unfamiliar (as well as familiar) goods, this is a strong assumption. We suggest the use of self-selected intervals, in which the shortest possible interval is a point, i.e. the standard case. To explore this idea we use a state-of-the-art psychophysics lab experiment (N=60), in which five specific sound environments were randomly inserted into a set of 31 pairwise comparisons to elicit the subjective value of reducing ambient noise. We found that valuation uncertainty, measured as the length of a self-selected interval, is independent of the psychophysical conditions. The length of the interval is determined mainly by the subjective value of improving the environment, independent of the level of noise. These results, according to our review of the literature, are new. Interval elicitation enables individuals to provide reasonably consistent rankings of environmental improvements, even if individuals find it difficult to pin down a precise value. Thus, self-selected interval elicitation seems to have merit.