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Instrument-Induced Bias in Donation Mechanisms: Evidence from the Field

  • Norwood Bailey

    ()

    (Oklahoma State University)

  • Lusk Jayson L

    ()

    (Oklahoma State University)

Eliciting actual donations toward a public good has been proposed as a means of estimating a lower bound to individualsÂ’ compensating surplus, and can be accomplished using mail/phone surveys or field experiments. This study shows that when warm-glow is present, the elicitation instrument decreases the transaction costs of donating. This presents an obstacle to using the donation mechanism. As a remedy, we propose the use of a multi-donation mechanism where subjects can direct their donation to alternative public goods. Results from a field experiment confirm this instrument-induced bias can be large, suggesting field experiment practitioners should seriously consider how their experimental procedures may alter economic behavior.

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Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 5 (2005)
Issue (Month): 2 (December)
Pages: 1-26

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Handle: RePEc:bpj:bejeap:v:contributions.5:y:2006:i:2:n:3
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