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


  • Barrage, Lint
  • Lee, Min Sok


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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    References listed on IDEAS

    1. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    2. Cummings, Ronald G, et al, 1997. "Are Hypothetical Referenda Incentive Compatible?," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 609-621, June.
    3. Shogren, Jason F., 2006. "Experimental Methods and Valuation," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 19, pages 969-1027 Elsevier.
    4. Craig E. Landry & John A. List, 2007. "Using Ex Ante Approaches to Obtain Credible Signals for Value in Contingent Markets: Evidence from the Field," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 420-429.
    5. List, John A. & Margolis, Michael & Shogren, Jason F., 1998. "Hypothetical-actual bid calibration of a multigood auction," Economics Letters, Elsevier, vol. 60(3), pages 263-268, September.
    6. 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.
    7. Brown, Thomas C. & Ajzen, Icek & Hrubes, Daniel, 2003. "Further tests of entreaties to avoid hypothetical bias in referendum contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 353-361, September.
    8. 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.
    9. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
    10. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
    11. David Aadland & Arthur J. Caplan, 2003. "Willingness to Pay for Curbside Recycling with Detection and Mitigation of Hypothetical Bias," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 492-502.
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    Cited by:

    1. Penn, Jerrod & Hu, Wuyang, 2016. "Making the Most of Cheap Talk in an Online Survey," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236171, Agricultural and Applied Economics Association.
    2. Bosworth Ryan & Taylor Laura O., 2012. "Hypothetical Bias in Choice Experiments: Is Cheap Talk Effective at Eliminating Bias on the Intensive and Extensive Margins of Choice?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-28, December.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Jacob Ladenburg & Jens Olav Dahlgaard & Ole Bonnichsen, 2010. "Testing the Effect of a Short Cheap Talk Script in Choice Experiments," IFRO Working Paper 2010/11, University of Copenhagen, Department of Food and Resource Economics.
    8. 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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