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‘Pocket and Pot’: Hypothetical Bias in a No-Free-Riding Public Contribution Game

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Author Info
Gubanova, Tatiana
Adamowicz, W.L.
McMillan, Melville

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Abstract

Hypothetical bias arises when values which people say they place on a good or service differ systematically from the values people reveal for the same good or service through actual, binding economic transactions. Studies of hypothetical bias with respect to public goods often use charitable contributions or other relatively unique goods and these studies employ a variety of mechanisms to elicit the stated and revealed values. This study proposes the inclusion of a free-rider barring random dictatorship mechanism in the standard public contribution game to investigate the issue of bias when a public good involves immediate monetary returns to subjects. Steps are taken to make the game have the look and feel of a real-world tradeoff between private investment and public good provision. Data for the experiment were collected using a sample of students from the University of Alberta. A statistically significant negative hypothetical bias is found for the first hypothetical and the first real rounds of the game. The bias decays in subsequent round pairs, oscillating around zero.

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Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49318.

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Date of creation: 2009
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Handle: RePEc:ags:aaea09:49318

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Keywords: Resource /Energy Economics and Policy;

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