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A penny for your thoughts: Inducing truth-telling in stated preference elicitation

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  • Barrage, Lint
  • Lee, Min Sok

Abstract

Contingent valuation often induces hypothetical bias. In a laboratory experiment, we test three calibration mechanisms: cheap-talk, consequentialism, and a new mechanism, the Bayesian truth serum ("BTS"). We apply the BTS in a "faith-based" format: subjects are informed about the purpose and potential efficacy of the BTS, but not its theoretical foundations. We find that real and hypothetical responses differ significantly; real and consequentialist responses are statistically indistinguishable; cheap-talk and the BTS eliminate bias inconsistently; subject characteristics interact significantly with treatment.

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  • Barrage, Lint & Lee, Min Sok, 2010. "A penny for your thoughts: Inducing truth-telling in stated preference elicitation," Economics Letters, Elsevier, vol. 106(2), pages 140-142, February.
    • Handle: RePEc:eee:ecolet:v:106:y:2010:i:2:p:140-142
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    2. Menapace, Luisa & Raffaelli, Roberta, 2020. "Unraveling hypothetical bias in discrete choice experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 416-430.
    3. Penn, Jerrod & Hu, Wuyang, 2016. "Making the Most of Cheap Talk in an Online Survey," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236171, Agricultural and Applied Economics Association.
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    6. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part II. Conceptualisation of external validity, sources and explanations of bias and effectiveness of mitigation methods," Journal of choice modelling, Elsevier, vol. 41(C).
    7. Ladenburg, Jacob & Olsen, Søren Bøye, 2014. "Augmenting short Cheap Talk scripts with a repeated Opt-Out Reminder in Choice Experiment surveys," Resource and Energy Economics, Elsevier, vol. 37(C), pages 39-63.
    8. Ewa Zawojska & Michał Krawczyk, 2022. "Incentivizing stated preference elicitation with choice-matching in the field," Working Papers 2022-04, Faculty of Economic Sciences, University of Warsaw.
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    10. Haghani, Milad & Sarvi, Majid, 2018. "Hypothetical bias and decision-rule effect in modelling discrete directional choices," Transportation Research Part A: Policy and Practice, Elsevier, vol. 116(C), pages 361-388.
    11. Anna Kukla-Gryz & Joanna Tyrowicz & Michał Krawczyk & Konrad Siwiński, 2015. "We all do it, but are we willing to admit? Incentivizing digital pirates' confessions," Applied Economics Letters, Taylor & Francis Journals, vol. 22(3), pages 184-188, February.
    12. Ladenburg, Jacob & Bonnichsen, Ole & Dahlgaard, Jens Olav, 2011. "Testing the Effect of a Short Cheap Talk Script in Choice Experiments," Nationaløkonomisk tidsskrift, Nationaløkonomisk Forening, vol. 2011(1), pages 25-54.
    13. Pengfei Liu & Xiaohui Tian, 2021. "Downward Hypothetical Bias in the Willingness to Accept Measure for Private Goods: Evidence from a Field Experiment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1679-1699, October.
    14. Varela, Elsa & Mahieu, Pierre-Alexandre & Giergiczny, Marek & Riera, Pere & Soliño, Mario, 2014. "Testing the single opt-out reminder in choice experiments: An application to fuel break management in Spain," Journal of Forest Economics, Elsevier, vol. 20(3), pages 212-222.
    15. Schmidt, Robert J., 2019. "Capitalizing on the (false) consensus effect: Two tractable methods to elicit private information," Working Papers 0669, University of Heidelberg, Department of Economics.
    16. Sergio Colombo & Wiktor Budziński & Mikołaj Czajkowski & Klaus Glenk, 2022. "The relative performance of ex‐ante and ex‐post measures to mitigate hypothetical and strategic bias in a stated preference study," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(3), pages 845-873, September.
    17. Charness, Gary & Gneezy, Uri & Rasocha, Vlastimil, 2021. "Experimental methods: Eliciting beliefs," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 234-256.
    18. Milad Haghani & Michiel C. J. Bliemer & John M. Rose & Harmen Oppewal & Emily Lancsar, 2021. "Hypothetical bias in stated choice experiments: Part II. Macro-scale analysis of literature and effectiveness of bias mitigation methods," Papers 2102.02945, arXiv.org.
    19. Michal Krawczyk & Anna Kukla-Gryz & Joanna Tyrowicz, 2015. "Digital piracy and the perception of price fairness," Working Papers 2015-24, Faculty of Economic Sciences, University of Warsaw.
    20. Matthew Quaife & Fern Terris-Prestholt & Gian Luca Di Tanna & Peter Vickerman, 2018. "How well do discrete choice experiments predict health choices? A systematic review and meta-analysis of external validity," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1053-1066, November.
    21. Mohammed H. Alemu & Søren B. Olsen, 2017. "Can a Repeated Opt-Out Reminder remove hypothetical bias in discrete choice experiments? An application to consumer valuation of novel food products," IFRO Working Paper 2017/05, University of Copenhagen, Department of Food and Resource Economics.
    22. Sergio Colombo & Wiktor Budziński & Mikołaj Czajkowski & Klaus Glenk, 2020. "Ex-ante and ex-post measures to mitigate hypothetical bias. Are they alternative or complementary tools to increase the reliability and validity of DCE estimates?," Working Papers 2020-20, Faculty of Economic Sciences, University of Warsaw.
    23. Penn, Jerrod & Hu, Wuyang, 2019. "Cheap talk efficacy under potential and actual Hypothetical Bias: A meta-analysis," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 22-35.
    24. Pierre-Alexandre Mahieu & Romain Crastes & Jordan Louviere & Ewa Zawojska, 2016. "Rewarding truthful-telling in stated preference studies," Working Papers 2016-33, Faculty of Economic Sciences, University of Warsaw.

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