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Augmenting short Cheap Talk scripts with a repeated Opt-Out Reminder in Choice Experiment surveys

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Author Info

  • Jacob Ladenburg

    ()
    (Danish Institute of Governmental Research)

  • Søren Bøye Olsen

    ()
    (Institute of Food and Resource Economics, University of Copenhagen)

Abstract

Hypothetical bias remains a major problem when valuing non-market goods with stated preference methods. Originally developed for Contingent Valuation studies, Cheap Talk has been found to effectively reduce hypothetical bias in some applications, though empirical results are ambiguous. We discuss reasons why Cheap Talk may fail to effectively remove hypothetical bias, especially in Choice Experiments. In this light, we suggest augmenting Cheap Talk in Choice Experiments with a so-called Opt-Out Reminder. Prior to each single choice set, the Opt-Out Reminder explicitly instructs respondents to choose the opt-out alternative if they find the experimentally designed alternatives too expensive. In an empirical Choice Experiment survey we find the Opt-Out Reminder to significantly reduce total WTP and to some extent also marginal WTP beyond the capability of the Cheap Talk applied without the Opt-Out Reminder. This suggests that rather than merely adopting the Cheap Talk practice directly from Contingent Valuation, it should be adapted to fit the potentially different decision processes and repeated choices structure of the Choice Experiment format. Our results further suggest that augmenting Cheap Talk with a dynamic Opt-Out Reminder can be an effective and promising improvement in the ongoing effort to remedy the particular types of hypothetical bias that potentially continue to invalidate Choice Experiment surveys.

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File URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2010/WP_2010_09_augmenting_cheap_talk_scripts.pdf
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Bibliographic Info

Paper provided by University of Copenhagen, Department of Food and Resource Economics in its series IFRO Working Paper with number 2010/9.

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Length: 40 pages
Date of creation: Jul 2010
Date of revision:
Handle: RePEc:foi:wpaper:2010_09

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Web page: http://www.ifro.ku.dk/
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Related research

Keywords: Cheap talk; Opt-Out Reminder; Choice Experiments; hypothetical bias; stream re-establishment; opt-out effect;

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References

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  1. 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.
  2. Richard C. Ready & Patricia A. Champ & Jennifer L. Lawton, 2010. "Using Respondent Uncertainty to Mitigate Hypothetical Bias in a Stated Choice Experiment," Land Economics, University of Wisconsin Press, vol. 86(2), pages 363-381.
  3. Jayson L. Lusk, 2003. "Effects of Cheap Talk on Consumer Willingness-to-Pay for Golden Rice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 840-856.
  4. James Murphy & P. Allen & Thomas Stevens & Darryl Weatherhead, 2005. "A Meta-analysis of Hypothetical Bias in Stated Preference Valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(3), pages 313-325, 03.
  5. Jayson Lusk & T Schroeder, 2004. "Are choice experiments incentive compatible? A test with quality differentiated beef steaks," Artefactual Field Experiments 00096, The Field Experiments Website.
  6. Ladenburg, Jacob & Olsen, Søren Bøye, 2008. "Gender-specific starting point bias in choice experiments: Evidence from an empirical study," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 275-285, November.
  7. Klick, Jonathan & Parisi, Francesco, 2008. "Social networks, self-denial, and median preferences: Conformity as an evolutionary strategy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1319-1327, August.
  8. James Murphy & Thomas Stevens & Darryl Weatherhead, 2005. "Is Cheap Talk Effective at Eliminating Hypothetical Bias in a Provision Point Mechanism?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(3), pages 327-343, 03.
  9. D Rigby & M Burton, 2003. "Modeling Indifference and Dislike: A Bounded Bayesian Mixed Logit Model of the UK Market for GM Food," The School of Economics Discussion Paper Series 0327, Economics, The University of Manchester.
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Cited by:
  1. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stephane Luchini, 2009. "A Test Of Cheap Talk In Different Hypothetical Contexts: The Case Of Air Pollution," Working Papers halshs-00382511, HAL.

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