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Effects Of Cheap Talk On Consumer Willingness-To-Pay For Golden Rice

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  • Lusk, Jayson L.

Abstract

A large body of literature suggests individuals behave differently when responding to hypothetical valuation questions than when actual payment is required. Such findings have generated a great deal of skepticism over the use of the contingent valuation method and benefit measures derived from it. Recently, a new method, cheap talk, has been proposed to eliminate the potential bias in hypothetical valuation questions. Cheap talk refers to process of explaining hypothetical bias to individuals prior to asking a valuation question. This study explores the effect of cheap talk in a mass mail survey using a conventional value elicitation technique. Results suggest that cheap talk was effective at reducing willingness-to-pay for most survey participants. However, consistent with previous research, cheap talk did not reduce willingness-to-pay for consumers who were knowledgeable of the good evaluated.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number 19597.

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Date of creation: 2002
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Handle: RePEc:ags:aaea02:19597

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Keywords: Consumer/Household Economics; Demand and Price Analysis;

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References

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  1. John A. List, 2001. "Do Explicit Warnings Eliminate the Hypothetical Bias in Elicitation Procedures? Evidence from Field Auctions for Sportscards," American Economic Review, American Economic Association, vol. 91(5), pages 1498-1507, December.
  2. Noussair, C. & Robin, S. & Ruffieux, B., 2001. "Do Consumers Not Care about Biotech Foods or Do They Just Not Read the Labels?," Purdue University Economics Working Papers 1142, Purdue University, Department of Economics.
  3. Fox, John A. & Shogren, J. & Hayes, Dermot J. & Kliebenstein, James, 2003. "Cvm-X: Calibrating Contingent Values with Experimental Auction Markets," Staff General Research Papers 11935, Iowa State University, Department of Economics.
  4. John List & Jason Shogren, 1998. "Calibration of the difference between actual and hypothetical valuations in a field experiment," Natural Field Experiments 00296, The Field Experiments Website.
  5. List, John A. & Margolis, Michael & Shogren, Jason F., 1998. "Hypothetical-actual bid calibration of a multigood auction," Economics Letters, Elsevier, vol. 60(3), pages 263-268, September.
  6. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
  7. Lusk, Jayson L. & Hudson, Darren, 2004. "Effect of monitor-subject cheap talk on ultimatum game offers," Journal of Economic Behavior & Organization, Elsevier, vol. 54(3), pages 439-443, July.
  8. John List & Paramita Sinha & Michael Taylor, 2006. "Using choice experiments to value non-market goods and services: Evidence from field experiments," Natural Field Experiments 00278, The Field Experiments Website.
  9. Carlsson, Fredrik & Martinsson, Peter, 2001. "Do Hypothetical and Actual Marginal Willingness to Pay Differ in Choice Experiments?: Application to the Valuation of the Environment," Journal of Environmental Economics and Management, Elsevier, vol. 41(2), pages 179-192, March.
  10. Haab, Timothy C., 1998. "Estimation Using Contingent Valuation Data from a "Dichotomous Choice with Follow-Up" Questionnaire: A Comment," Journal of Environmental Economics and Management, Elsevier, vol. 35(2), pages 190-194, March.
  11. Timothy C. Haab & Ju-Chin Huang & John C. Whitehead, . "Are Hypothetical Referenda Incentive Compatible? A Comment," Working Papers 9708, East Carolina University, Department of Economics.
  12. Jayson L. Lusk & Jutta Roosen & John A. Fox, 2003. "Demand for Beef from Cattle Administered Growth Hormones or Fed Genetically Modified Corn: A Comparison of Consumers in France, Germany, the United Kingdom, and the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 16-29.
  13. Laura O. Taylor & Ronald G. Cummings, 1999. "Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method," American Economic Review, American Economic Association, vol. 89(3), pages 649-665, June.
  14. Cameron Trudy Ann & Quiggin John, 1994. "Estimation Using Contingent Valuation Data from a Dichotomous Choice with Follow-Up Questionnaire," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 218-234, November.
  15. Lusk, Jayson L. & Moore, Melissa & House, Lisa & Morrow, Bert, 2001. "Influence Of Brand Name And Type Of Modification On Consumer Acceptance Of Genetically Engineered Corn Chips: A Preliminary Analysis," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(04).
  16. John Loomis & Thomas Brown & Beatrice Lucero & George Peterson, 1997. "Evaluating the Validity of the Dichotomous Choice Question Format in Contingent Valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(2), pages 109-123, September.
  17. Shogren, Jason F. & List, John & Hayes, Dermot J., 2000. "Preference Learning in Consecutive Experimental Auctions," Staff General Research Papers 5023, Iowa State University, Department of Economics.
  18. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
  19. Massimo Paradiso & Antonella Trisorio, 2001. "The effect of knowledge on the disparity between hypothetical and real willingness to pay," Applied Economics, Taylor & Francis Journals, vol. 33(11), pages 1359-1364.
  20. Timothy C. Haab & Kenneth E. McConnell, 1998. "Referendum Models and Economic Values: Theoretical, Intuitive, and Practical Bounds on Willingness to Pay," Land Economics, University of Wisconsin Press, vol. 74(2), pages 216-229.
  21. Trudy Ann Cameron, 1991. "Interval Estimates of Non-Market Resource Values from Referendum Contingent Valuation Surveys," Land Economics, University of Wisconsin Press, vol. 67(4), pages 413-421.
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