Valuation by conflict

Nonmarket valuation remains a central issue in ecological and environmental economics. This paper examines the properties of an ex post revealed preference approach to value nonmarket goods-valuation through observed effort expended in an environmental conflict. We consider the strategic interaction between players in a conflict, address the implied Nash equilibrium, and report a benchmark 4x-rule as an ex post valuation estimate for a symmetric player conflict. We then illustrate the degree of bias that exists once one allows for asymmetries in delegation, ability, and valuation. The benchmark tends to overestimate value if a firm hires a powerful delegate who receives a large contingency fee. (c) 2004 Elsevier B.V. All rights reserved.