A third question format, the dichotomous choice approach, 

 combines some of the better features of both open-ended and 

 iterative bidding. In dichotomous choice, the individual is 

 faced with a single specific dollar bid and (like bidding games) 

 the response is a simple market-like yes or no. The dollar bid 

 amount is systematically varied across respondents. This format 

 is amenable to mail surveys and is therefore relatively low cost. 

 This relatively new approach has been successfully applied to 

 valuation of hunting permits (Bishop and Heberlein, 1980) , 

 boating and scenic beauty (Boyle and Bishop, 1984) and instream 

 flow valuation (Duffield, Neher, Patterson and Allen, 1990) 

 among many other applications. 



In this study the dichotomous choice approach was used to value 

 waterfowl hunting trips. Although there are advantages and 

 disadvantages to each method, recent research shows dichotomous 

 choice models can provide fair approximations to actual market 

 transactions (Bishop and Heberlein, 1980; Welsh, 1986) . In 

 general, comparisons of real markets to simulated CVM markets 

 indicate that respondents attempt to give their true value of 

 resources being studied. A discussion of the specific CVM 

 questions asked and the application of CVM analysis to Montana 

 waterfowl hunting is presented in chapter IV. 



Estimation of Willingness to Pay Using Dichotomous Choice CVM 



The major disadvantage of the dichotomous choice method is that 

 analysis is more complex than with open-ended or iterative 

 bidding methods. In view of the considerable advancements in 

 methods for modeling discrete choice (Amemiya, 1981) this 

 complexity is manageable and acceptable when compared with the 

 advantages which dichotomous choice CVM questions afford. These 

 advantages include: a realistic market-like scenario and a high 

 percentage of responses to the CVM questions. 



The expected maximum willingness to pay for a waterfowl hunting 

 trip is estimated by finding a relationship between the amount of 

 the bid level which respondents are asked to pay and the 

 probability of their responding yes to that amount. This 

 estimated relationship between bid level and probability of a 

 "yes" response can be represented graphically as 2 dimensional 

 curve. The area under this curve (which can be calculated 

 through integration of the curve between and some chosen 

 maximum truncation level) is called a truncated mean and is one 

 measure of the expected maximum willingness to pay for the 

 waterfowl hunting trip. 



While the estimated maximum willingness to pay for a waterfowl 

 hunting trip provides a great deal of information regarding the 

 net economic value of waterfowl hunting, it is also of interest 

 to determine how precisely estimated those willingness to pay 



