An experimental test of the solemn oath in eliciting sincere preferences

Hanxiao Wu and Botao Qin

MPRA Paper from University Library of Munich, Germany

Abstract: Hypothetical bias is the gap between the hypothetical willingness to pay and the real economic payment. Subjects may overstate or understate their willingness to pay due to strategic behaviour. This bias is common in contingent valuation studies. In this study, we attempt to use a commitment device to correct the bias, in order to elicit sincere preferences. We use a solemn oath in second-price auctions, using both induced valuations and homegrown valuations. Using a random effect panel data model, we draw three conclusions: (1) there is a gap between subjects' bids and their true willingness to pay due to the violation of both the budget constraint and the participation constraint; (2) oaths in the induced value experiment can increase subjects' bids towards the induced value only given real monetary incentives; (3) oaths can modestly correct the hypothetical bias in the homegrown valuation experiment.

Keywords: Preference elicitation; Oath; Second-price auction; Induced-value experiment; Homegrown valuation (search for similar items in EconPapers)
JEL-codes: C90 D44 Q51 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-dcm and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:95913

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