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Hypothetical bias and framing effect in the valuation of private consumer goods

Author

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  • Magdalena Brzozowicz

    (University of Warsaw, Faculty of Economic Sciences)

Abstract

In the laboratory experiment, I examine two behavioral effects: hypothetical bias and the framing effect. I elicited willingness to pay (WTP) for a cosmetic product, and manipulated framing conditions (positive vs. negative attribute framing) and incentives to reveal the actual valuation (hypothetical vs. real). In this case, I demonstrated that hypothetical bias has a significant impact on WTP values; however, the framing effect has no effect on valuation of the product. Similarly, I found no interaction between the two effects. This observation contributes to claims that hypothetical research methods lead to equally reliable data as those based on consequential choices.

Suggested Citation

  • Magdalena Brzozowicz, 2018. "Hypothetical bias and framing effect in the valuation of private consumer goods," Working Papers 2018-23, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2018-23
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    File URL: https://www.wne.uw.edu.pl/index.php/download_file/4620/
    File Function: First version, 2018
    Download Restriction: no
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    More about this item

    Keywords

    framing effect; hypothetical bias; laboratory experiment;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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