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Does the willingness to pay for sustainable investments differ between non-incentivized and incentivized choice experiments?

Author

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  • Daniel Engler

    (University of Kassel, Institute of Economics)

  • Gunnar Gutsche

    (Paderborn University, Faculty of Business Administration and Economics; University of Kassel, Institute of Economics)

  • Andreas Ziegler

    (University of Kassel, Institute of Economics)

Abstract

Based on a randomized controlled trial, this paper compares individual investment decisions in pre-registered non-incentivized and incentivized choice experiments to examine hypothetical bias. Using data from a representative sample of over 2,100 individual investors from Germany and France, our econometric analysis reveals that the willingness to pay for sustainable investments is not significantly higher in the non-incentivized setting than in the incentivized setting, which is contrary to predictions from previous studies. The results are robust to various explanations of hypothetical bias and experimental design choices. Individual characteristics tend to have similar estimated effects on the preference for sustainable investments in both experimental settings. The results of our experimental analysis provide insights into the reliability of previous stated choice experiments and guidance for future experiments in (sustainable) finance. Furthermore, our estimation results improve our understanding of individual investment decisions, which is crucial from a policy perspective since individual investors play an important role in financing the transition to a sustainable economy.

Suggested Citation

  • Daniel Engler & Gunnar Gutsche & Andreas Ziegler, 2025. "Does the willingness to pay for sustainable investments differ between non-incentivized and incentivized choice experiments?," MAGKS Papers on Economics 202515, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:202515
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    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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