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Hypothetical bias for private goods: does cheap talk make a difference?

Author

Listed:
  • Maurice Doyon

    (ULaval - Université Laval [Québec])

  • Laure Saulais

    (Institut Paul Bocuse = Institut Lyfe)

  • Bernard Ruffieux

    (GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique, Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology)

  • Denise Bweli

    (Egg Farmers of Canada)

Abstract

Economists and market researchers often need to accurately gauge consumers' willingness-to-pay for private goods. The experimental literature has identified a problem of hypothetical bias when using stated preferences techniques, such as open-ended questions. It has been suggested that using a cheap talk script has the potential to resolve this bias. Yet, few empirical studies on the efficiency of cheap talk for private goods exist. This study uses a between-subjects experimental design to compare consumers' willingness-to-pay for DHA-enriched milk using three elicitation methods: 1) Hypothetical open-ended stated preference question, without monetary consequence for the respondent; 2) Idem to the first with the addition of a cheap talk script; and 3) A Vickrey auction with real monetary consequences. In this experiment subjects have the choice to participate, or not, at each period. Our results indicate a significant hypothetical bias. While the use of cheap talk has no impact on this bias, it does however increase the level of participation to the market.

Suggested Citation

  • Maurice Doyon & Laure Saulais & Bernard Ruffieux & Denise Bweli, 2015. "Hypothetical bias for private goods: does cheap talk make a difference?," Post-Print hal-01254936, HAL.
  • Handle: RePEc:hal:journl:hal-01254936
    DOI: 10.4236/tel.2015.56087
    Note: View the original document on HAL open archive server: https://hal.science/hal-01254936
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    References listed on IDEAS

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    Cited by:

    1. Magdalena Brzozowicz & Michał Krawczyk & Przemysław Kusztelak, 2017. "Do anchors hold for real? Anchoring effect and hypothetical bias in declared WTP," Working Papers 2017-24, Faculty of Economic Sciences, University of Warsaw.
    2. 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.
    3. Brzozowicz Magdalena, 2018. "Hypothetical bias and framing effect in the valuation of private consumer goods," Central European Economic Journal, Sciendo, vol. 5(52), pages 260-269, January.
    4. Atozou, Baoubadi & Tamini, Lota D. & Bergeronm, Stephane & Doyon, Maurice, 2020. "Factors Explaining the Hypothetical Bias: How to Improve Models for Meta-Analyses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 45(2), March.
    5. 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.
    6. Magdalena Brzozowicz & Michał Krawczyk, 2020. "Honey, Mugs and Caricatures: anchors on prices of consumer goods only hold hypothetically," Working Papers 2020-40, Faculty of Economic Sciences, University of Warsaw.
    7. Stephane Bergeron & Maurice Doyon & Laurent Muller, 2019. "Strategic response: A key to understand how cheap talk works," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(1), pages 75-83, March.
    8. 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.

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    Keywords

    cheap talk; hypothetical bias; willingness to pay; experimental economics;
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