Preferences of construction sector professionals for environmentally friendly energy: Testing the embedding effect in contingent valuation

Torma, Zsofia Erika and Csigéné Nagypál, Noémi Éva (2026) Preferences of construction sector professionals for environmentally friendly energy: Testing the embedding effect in contingent valuation. ECOCYCLES, 11 (2). pp. 78-90. ISSN 2416-2140

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Abstract

Behavioural economics provides a framework for linking economic and psychological motivations, offering answers to decision-making situations that cannot be explained by the rational consumer model of neoclassical economics. The aim of the research is to identify two cognitive decision biases that arise in the contingent valuation method (CVM) through empirical analysis. The research is a quantitative survey, based on the responses of more than 100 respondents working in the Hungarian construction industry, which reveals the respondents' willingness to pay for energy efficiency investments. Participants were asked to evaluate an environmentally friendly heating system, a solar panel system, and a package combining the two. The results clearly showed the presence of an embedding effect, as the sum of willingness to pay for the separate components significantly exceeded the value of the combined package. This anomaly is consistent with the warm glow effect, which essentially means that one of the main motivating force behind the willingness to pay expressed in the responses is a feeling of moral satisfaction. The paired samples t-test confirmed the statistical significance of the embedding effect (t(103) = -9.372, p < 0.001), confirming that respondents' decisions were influenced not only by rational financial considerations but also by psychological factors. The results support previous international studies (e.g., Kahneman & Knetsch, 1992; Hoevenagel, 1996; Nunes & Schokkaert, 2003) and provide new empirical evidence for the combined occurrence of the embedding effect which in this context can be interpreted as a combined occurrence with the 'warm glow' phenomenon. The study also highlights that even among professionals with expertise, such as those working in the construction industry, decision-making biases can strongly influence preferences. The conclusions drawn from the research results highlight the methodological limitations of contingent valuation, which stem from psychological factors and decision-making biases and must be taken into account when evaluating environmental goods and developing related policies. Overall, the study contributes to the literature by bridging behavioural and environmental economics, providing empirical evidence on how moral motivation and cognitive biases can jointly distort willingness-to-pay estimates in sustainability-related decisions.

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