Mitigating Hypothetical Bias: Evidence on the Effects of Correctives from a Large Field Study

Manuel Frondel, Mark Andor and Colin Vance

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: The overestimation of willingness-to-pay (WTP) in hypothetical responses is a well-known finding in the literature. Various techniques have been proposed to remove or, at least, reduce this bias. Using about 30,000 responses on WTP for a variety of power mixes from a panel of 6,500 German households, this article simultaneously explores the effects of two common ex-ante approaches -- cheap talk and consequential script -- and the ex-post certainty approach to calibrating hypothetical WTP responses. Based on a switching regression model that accounts for the potential endogeneity of respondent certainty and controlling for unobserved heterogeneity using a fixed-effects estimator, we find evidence for a lower WTP among those respondents who classify themselves as definitely certain about their answers. While neither cheap talk nor the consequential-script corrective reduce WTP estimates, receiving either of these scripts increases the probability that respondents indicate definite certainty about their WTP bids.

JEL-codes: C01 C24 Q41 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ene
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https://www.econstor.eu/bitstream/10419/112990/1/VfS_2015_pid_600.pdf (application/pdf)

Related works:
Journal Article: Mitigating Hypothetical Bias: Evidence on the Effects of Correctives from a Large Field Study (2017)
Working Paper: Mitigating Hypothetical Bias – Evidence on the Effects of Correctives from a Large Field Study (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112990

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