ABSTRACT
In this chapter, the author reviews the main weaknesses of stated and revealed preference approaches. This is followed by an illustration of how the pair-wise comparison method may be carried out and how it avoids the problems inherent in both stated and revealed preference approaches. However, when employing the pair-wise comparison method, it is better to describe the items in as much detail as possible to minimize the need for respondents’ imagination. In using surveys like the stated preference approaches, the pair-wise comparison method easily avoids the strict assumptions mandated by the revealed preference approaches. Apart from working around the major limitations of the stated and revealed preference approaches, the pair-wise comparison method has also been shown to be relatively easy and cost-effective to implement. Finally, the author concludes by summarizing the main points and present cases in which the method has been applied in valuation studies.
