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Contingent valuation surveys were first proposed in theory by S.V. Ciriacy-Wantrup (1947) as a method for eliciting market valuation of a non-market good.The first practical application of the technique was in 1963 when Robert K. Davis used surveys to estimate the value hunters and tourists placed on a particular wilderness area.
To determine the value of these rights, analysts will apply a modified option pricing model based on the probability of the event, the time horizon specified, and the corresponding payout rules; see Contingent claim valuation, Real options valuation, and Mergers and acquisitions § Business valuation. [8]
Contingent claim valuation is also used to value specific balance sheet assets and liabilities which similarly exhibit option like characteristics. [13] Examples are employee stock options, warrants and other convertible securities, and investments with embedded options such as callable bonds or contingent convertible bonds.
The embedding effect is an issue in environmental economics and other branches of economics where researchers wish to identify the value of a specific public good using a contingent valuation or willingness-to-pay (WTP) approach. The problem arises because public goods belong to society as a whole, and are generally not traded in the market.
Generally, there are three approaches taken, namely discounted cashflow valuation, relative valuation, and contingent claim valuation. [ 1 ] Valuations can be done for assets (for example, investments in marketable securities such as companies' shares and related rights, business enterprises, or intangible assets such as patents , data and ...
Contingent valuation is a common method in identifying how consumers value various things like healthcare, safety and the environment. The WTA and WTP are very common methods for contingent valuation, where subjects are asked exactly how much money they would be willing to accept in order to receive one less unit of the goods or conversely how ...
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A requirement that fees be not contingent on appraised value Fees based upon, for example, a percentage of the valuation are unethical and are not allowed. A requirement that all limiting conditions be explicitly stated The reader must be informed of all assumptions made as part of the valuation.