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Testing the Effect of a Short Cheap Talk Script in Choice Experiments

Author

Listed:
  • Jacob Ladenburg

    () (Danish Institute of Governmental Research)

  • Jens Olav Dahlgaard

    () (Danish Institute of Governmental Research)

  • Ole Bonnichsen

    () (Institute of Food and Resource Economics, University of Copenhagen)

Abstract

The application of stated preference methods rests on the assumption that respondents act rationally and that their demand for the non-market good on the hypothetical market is equal to what their real demand would be. Previous studies have shown that this is not the case and this gap is known as hypothetical bias. The present paper attempts to frame the description of the hypothetical market so as to induce more “true market behaviour” in the respondents by including a short Cheap Talk script. The script informs respondents that in similar studies using stated preference methods, people have a tendency to overestimate how much they are willing to pay compared to their actual (true) willingness to pay. Applying a two-split sample approach to a Choice Experiment study focusing on preferences for reducing visual disamenities from offshore wind farms, the Cheap Talk script is found to be a preference mover, but does not affect preferences significantly. Significant effects are found when relating the effect of the Cheap Talk script to the cost levels of the alternatives, in that female respondents are found to choose higher cost alternatives less frequently when presented with the Cheap Talk script, while male respondents are not affected.

Suggested Citation

  • 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.
    • Handle: RePEc:foi:wpaper:2010_11
    as

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    File URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2010/WP_2010_11_testing_effect.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Johansson-Stenman Olof & Svedsäter Henrik, 2008. "Measuring Hypothetical Bias in Choice Experiments: The Importance of Cognitive Consistency," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-10, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ole Bonnichsen & Jacob Ladenburg, 2010. "Reducing Status Quo Bias in Choice Experiments – An Application of a Protest Reduction Entreaty," IFRO Working Paper 2010/7, University of Copenhagen, Department of Food and Resource Economics.
    2. 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.
    3. Lauren Knapp & Jacob Ladenburg, 2015. "How Spatial Relationships Influence Economic Preferences for Wind Power—A Review," Energies, MDPI, Open Access Journal, vol. 8(6), pages 1-25, June.

    More about this item

    Keywords

    Cheap Talk; Stated Preferences; Choice Experiment; Hypothetical Bias; Gender;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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