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

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  • Ladenburg, Jacob
  • Olsen, Søren Bøye

Abstract

Hypothetical bias continues to be a major challenge for stated preference methods. Cheap Talk (CT) has been found to be an effective remedy in some applications, though empirical results are ambiguous. We discuss reasons why CT may fail to effectively remove specific types of hypothetical bias in Choice Experiments. We suggest augmenting CT in Choice Experiments with a so-called Opt-Out Reminder (OOR). Prior to each choice set, the OOR explicitly instructs respondents to choose the opt-out alternative, if they find the experimentally designed alternatives too expensive. In an empirical survey we find the OOR to significantly reduce total WTP and to some extent also marginal WTP beyond the capability of the CT applied without the OOR. This suggests that the CT practice should be adapted to fit the potentially different decision processes and repeated choices structure of the Choice Experiment format, rather than merely being adopted directly from Contingent Valuation.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:resene:v:37:y:2014:i:c:p:39-63
    DOI: 10.1016/j.reseneeco.2014.05.002
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    Keywords

    Cheap Talk; Opt-Out Reminder; Choice Experiments; Hypothetical bias; Stream re-establishment; Opt-out effect;
    All these keywords.

    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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