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Hypothetical bias and certainty calibration in a value of time experiment

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Abstract

This study is the first to analyze hypothetical bias in a willingness to pay for time context as well as the first to test certainty calibration of the value of time. Hypothetical and real actions are compared in an experimental setting where the subjects are given an offer to leave the experiment in advance by paying a given amount of cash. The results show a weak tendency of positive hypothetical bias in the willingness to pay for value of time, though this effect is not different from zero at conventional significance levels. However, certainty calibration, by using the information from a follow-up question where the subjects are self-stating their preference certainty of their hypothetical choice, provides evidence of a significant positive hypothetical bias for non-certain subjects whereas this bias is eliminated for certain subjects.

Suggested Citation

  • Swärdh, Jan-Erik, 2008. "Hypothetical bias and certainty calibration in a value of time experiment," Working Papers 2008:7, Swedish National Road & Transport Research Institute (VTI).
  • Handle: RePEc:hhs:vtiwps:2008_007
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    File URL: http://www.transportportal.se/SWoPEc/Hypbias_Swardh.pdf
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    Keywords

    Value of time; Hypothetical bias; Certainty calibration; Preference certainty;

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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