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Effects of Cheap Talk on Consumer Willingness-to-Pay for Golden Rice

  • Jayson L. Lusk

A large body of literature suggests willingness-to-pay is overstated in hypothetical valuation questions as compared to when actual payment is required. Recently, “cheap talk” has been proposed to eliminate the potential bias in hypothetical valuation questions. Cheap talk refers to process of explaining hypothetical bias to individuals prior to asking a valuation question. This study explores the effect of cheap talk in a mass mail survey using a conventional value elicitation technique. Results indicate that cheap talk was effective at reducing willingness-to-pay for most survey participants; however, consistent with previous research, cheap talk did not reduce willingness-to-pay for knowledgeable consumers. Copyright 2003, Oxford University Press.

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Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 85 (2003)
Issue (Month): 4 ()
Pages: 840-856

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Handle: RePEc:oup:ajagec:v:85:y:2003:i:4:p:840-856
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  1. Jayson L. Lusk & Jutta Roosen & John A. Fox, 2003. "Demand for Beef from Cattle Administered Growth Hormones or Fed Genetically Modified Corn: A Comparison of Consumers in France, Germany, the United Kingdom, and the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 16-29.
  2. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
  3. 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.
  4. John Loomis & Thomas Brown & Beatrice Lucero & George Peterson, 1997. "Evaluating the Validity of the Dichotomous Choice Question Format in Contingent Valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(2), pages 109-123, September.
  5. Unnevehr, Laurian J. & Eales, J. & Jensen, Helen H. & Lusk, J. & McCluskey, J. & Kinsey, J., 2010. "Food and Consumer Economics," Staff General Research Papers 31410, Iowa State University, Department of Economics.
  6. Lusk, Jayson L. & Moore, Melissa & House, Lisa & Morrow, Bert, 2001. "Influence Of Brand Name And Type Of Modification On Consumer Acceptance Of Genetically Engineered Corn Chips: A Preliminary Analysis," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(04).
  7. McKinley Blackburn & Glenn W. Harrison & E. Elisabet Rutström, 1994. "Statistical Bias Functions and Informative Hypothetical Surveys," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(5), pages 1084-1088.
  8. Trudy Ann Cameron & John Quiggin, 1992. "Estimation Using Contingent Valuation Data From a "Dichotomous Choice with Follow-Up" Questionnaire," UCLA Economics Working Papers 653, UCLA Department of Economics.
  9. List, John A. & Shogren, Jason F., 1998. "Calibration of the difference between actual and hypothetical valuations in a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 37(2), pages 193-205, October.
  10. Haab, Timothy C., 1998. "Estimation Using Contingent Valuation Data from a "Dichotomous Choice with Follow-Up" Questionnaire: A Comment," Journal of Environmental Economics and Management, Elsevier, vol. 35(2), pages 190-194, March.
  11. Jason F. Shogren & John A. List & Dermot J. Hayes, 2000. "Preference Learning in Consecutive Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1016-1021.
  12. Massimo Paradiso & Antonella Trisorio, 2001. "The effect of knowledge on the disparity between hypothetical and real willingness to pay," Applied Economics, Taylor & Francis Journals, vol. 33(11), pages 1359-1364.
  13. John List, 2001. "Do explicit warnings eliminate the hypothetical bias in elicitation procedures? Evidence from field auctions for sportscards," Framed Field Experiments 00163, The Field Experiments Website.
  14. 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.
  15. 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.
  16. List John A. & Sinha Paramita & Taylor Michael H., 2006. "Using Choice Experiments to Value Non-Market Goods and Services: Evidence from Field Experiments," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-39, January.
  17. Carlsson, Fredrik & Martinsson, Peter, 2001. "Do Hypothetical and Actual Marginal Willingness to Pay Differ in Choice Experiments?: Application to the Valuation of the Environment," Journal of Environmental Economics and Management, Elsevier, vol. 41(2), pages 179-192, March.
  18. 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.
  19. Noussair, C. & Robin, S. & Ruffieux, B., 2001. "Do Consumers Not Care about Biotech Foods or Do They Just Not Read the Labels?," Purdue University Economics Working Papers 1142, Purdue University, Department of Economics.
  20. Timothy C. Haab & Ju-Chin Huang & John C. Whitehead, . "Are Hypothetical Referenda Incentive Compatible? A Comment," Working Papers 9708, East Carolina University, Department of Economics.
  21. Fox, John A. & Shogren, Jason F. & Hayes, Dermot J. & Kliebenstein, James, 1998. "Cvm-X: Calibrating Contingent Values with Experimental Auction Markets," Staff General Research Papers 1311, Iowa State University, Department of Economics.
  22. Trudy Ann Cameron, 1991. "Interval Estimates of Non-Market Resource Values from Referendum Contingent Valuation Surveys," Land Economics, University of Wisconsin Press, vol. 67(4), pages 413-421.
  23. Timothy C. Haab & Kenneth E. McConnell, 1998. "Referendum Models and Economic Values: Theoretical, Intuitive, and Practical Bounds on Willingness to Pay," Land Economics, University of Wisconsin Press, vol. 74(2), pages 216-229.
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