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Revisiting Cheap Talk with New Evidence from a Field Experiment

  • Silva, Andres
  • Nayga, Rodolfo M., Jr.
  • Campbell, Benjamin L.
  • Park, John L.

We assess the reduction of hypothetical bias in consumers’ willingness to pay (WTP) for products by applying a generic, short, and neutral cheap talk script in a retail setting. Using an open-ended elicitation mechanism with non-hypothetical, hypothetical, and hypothetical with cheap talk treatments, our results indicate that the hypothetical WTP values are higher than the nonhypothetical values, but the hypothetical with cheap talk values are not significantly different from non-hypothetical estimates.

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File URL: http://purl.umn.edu/117168
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Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 36 (2011)
Issue (Month): 2 (August)
Pages:

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Handle: RePEc:ags:jlaare:117168
Contact details of provider: Web page: http://waeaonline.org/

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  1. Lusk, Jayson L., 2002. "Effects Of Cheap Talk On Consumer Willingness-To-Pay For Golden Rice," 2002 Annual meeting, July 28-31, Long Beach, CA 19597, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Jayson L. Lusk & F. Bailey Norwood, 2009. "An Inferred Valuation Method," Land Economics, University of Wisconsin Press, vol. 85(3), pages 500-514.
  3. 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.
  4. Ronald G. Cummings & Laura Osborne Taylor, 1998. "Does Realism Matter in Contingent Valuation Surveys?," Land Economics, University of Wisconsin Press, vol. 74(2), pages 203-215.
  5. Johannesson, Magnus, et al, 1999. "Calibrating Hypothetical Willingness to Pay Responses," Journal of Risk and Uncertainty, Springer, vol. 18(1), pages 21-32, April.
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  7. Jayson Lusk & Ted Schroeder, 2004. "Are choice experiments incentive compatible? A test with quality differentiated beef steaks," Artefactual Field Experiments 00096, The Field Experiments Website.
  8. Jason Shogren & John List, 1998. "Calibration of the difference between actual and hypothetical valuations in a field experiment," Natural Field Experiments 00296, The Field Experiments Website.
  9. Glenn Harrison & John List, 2004. "Field experiments," Artefactual Field Experiments 00058, The Field Experiments Website.
  10. Bishwanath Goldar & Smita Misra, 2001. "Valuation of Environmental Goods: Correcting for Bias in Contingent Valuation Studies Based on Willingness-to-Accept," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 150-156.
  11. John Loomis & Thomas Brown & Beatrice Lucero & George Peterson, 1996. "Improving Validity Experiments of Contingent Valuation Methods: Results of Efforts to Reduce the Disparity of Hypothetical and Actual Willingness to Pay," Land Economics, University of Wisconsin Press, vol. 72(4), pages 450-461.
  12. 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.
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  14. Charness, Gary & Grosskopf, Brit, 2004. "What makes cheap talk effective? Experimental evidence," Economics Letters, Elsevier, vol. 83(3), pages 383-389, June.
  15. Balistreri, Edward J. & Poe, Gregory L. & McClelland, Gary H. & Schulze, William D., 1996. "Can Hypothetical Questions Reveal True Values? A Laboratory Comparison of Dichotomous Choice and Open-Ended Contingent Values with Auction Values," Working Papers 127865, Cornell University, Department of Applied Economics and Management.
  16. 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.
  17. Irwin, Julie R, et al, 1998. "Payoff Dominance vs. Cognitive Transparency in Decision Making," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 272-85, April.
  18. repec:ebl:ecbull:v:2:y:2007:i:1:p:1-9 is not listed on IDEAS
  19. Jayson Lusk & Ted Schroeder & Ty Feldkamp, 2004. "Experimental auction procedure: Impact on valuation of quality differentiated goods," Artefactual Field Experiments 00097, The Field Experiments Website.
  20. 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.
  21. Maynard, Leigh J. & Hartell, Jason G. & Meyer, A. Lee & Hao, Jianqiang, 2003. "An Experimental Approach To Valuing New Differentiated Products," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25810, International Association of Agricultural Economists.
  22. Carlsson, Fredrik & Frykblom, Peter & Lagerkvist, Carl-Johan, 2004. "Using Cheap-Talk as a Test of Validity in Choice Experiments," Working Papers in Economics 128, University of Gothenburg, Department of Economics.
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  27. Deacue Fields & Walt Prevatt, 2008. "An Incentive Compatible Conjoint Ranking Mechanism," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 487-498.
  28. Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2004. "Revealing consumers' willingness-to-pay: A comparison of the BDM mechanism and the Vickrey auction," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 725-741, December.
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  31. Santos, Vasco, 2000. "Alternating-announcements cheap talk," Journal of Economic Behavior & Organization, Elsevier, vol. 42(3), pages 405-416, July.
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  33. 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.
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