Journal of Student Research 2015

71

Contingency Valuation and Interviews in Open-Source Software Market: Contingency Valuation and Interviews in Open-Source Software Market: Utilizing Conjoint Methodology in Economics

Cory Gunderson Applied Social Science-Economics, Senior

ABSTRACT This research investigated a possible anomaly in the computer

software market where seemingly irrational purchase preferences of closed source software with an above zero price were compared to open-source soft ware with a zero purchase cost product. Classical theory would predict con sumers, when comparing two identical goods, would prefer a lower price to a higher market price. The marketplace for computer software is changing as quickly as the personal computing market. One way to determine the value of a zero purchasing cost good is to utilize the Contingent Valuation Method (CVM). This research set out to determine whether introducing interview re search could lessen the bias of small sample sizes in CVM. The methodology prepared in this paper encompasses risk aversion, consumer knowledge, and demand schedules for zero-priced goods. This research evaluates if the source code’s transparency affected market demand for statistical regression software used by academic economists in Wisconsin to determine the effectiveness of the methodology developed within this research. INTRODUCTION Contingent Valuation Method is an econometric tool used typically to estimate the value of environmental and ecosystem products or services. It is considered a “stated preference” method because the survey asks the respondent directly to state the value of the product or service. Contingent Valuation is primarily used in environmental economics due to the lack of an explicit value. This powerful tool can discover the value of an acre of trees or whether certain environmental, governmental policies are realistic to the market. It can also assign values to non-use values. A hypothetical example of this would be “What tax would you pay to stop deforestation in Billings, Montana?” This type of question asks not what they would pay for deforesta tion, but what they would pay to avoid it. The statistical computer software market might seem a far cry from Keywords: open-source software, small sample sizes, data limitations, contin gent valuation, mixed-methods economic research, conjoint methodology .