The relative performance of ex‐ante and ex‐post measures to mitigate hypothetical and strategic bias in a stated preference study

Sergio Colombo, Wiktor Budzinski, Mikolaj Czajkowski and Klaus Glenk

Journal of Agricultural Economics, 2022, vol. 73, issue 3, 845-873

Abstract: Bias related to the hypothetical setting remains controversial regarding the reliability and validity of value estimates from discrete choice experiments (DCEs). This has motivated a large body of literature to investigate approaches for mitigating hypothetical and strategic bias. Our study provides further evidence to inform this debate by testing whether a combination of ex‐ante or ex‐post mitigation strategies might be effective in reducing bias in DCEs. Specifically, we employ individual and multiple ex‐ante reminders alongside an ex‐post data treatment and analyse how their individual or joint use affects willingness to pay (WTP) estimates. The econometric analysis makes use of innovative semi‐parametric logit‐mixed logit in addition to the state‐of‐the‐art mixed logit model. The empirical case study focuses on preferences for the environmental and social impacts of organic olive production. By comparing the three experimental treatments with a control treatment, we test whether ex‐ante cheap talk, a reminder of the project's relative spatial extent, or a combination of both affect stated WTP. In addition, we use an ex‐post data treatment to correct WTP estimates. WTP estimates of treatments related to ex‐ante mitigation strategies did not differ significantly from those obtained from a control treatment with standard budget constraint reminders. However, the ex‐post approach results in a significant reduction in mean WTP estimates and is used to investigate whether the observed choice inconsistencies are due to unintentional errors or strategic behaviour. We argue that ex‐post mechanisms deserve greater attention and highlight the need to distinguish strategic behaviour from other sources of hypothetical bias.

Date: 2022
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