Sequencing and Nesting in Contingent Valuation Surveys

The term "embedding" is ill-defined and has been applied to distinct phenomena, some predicted by economic theory and others not. This paper lays out a theoretical framework for looking at these phenomena and provides a set of well-defined terms. Included is a discussion of survey design problems which may induce spurious evidence in favor of the hypothesis that respondents are insensitive to the scope of the good being valued. An empirical example of the component sensitivity is provided. This test rejects the hypothesis that respondents are insensitive to the scope of the good being valued.