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Testing the effect of changes in elicitation format, payment vehicle and bid range on the hypothetical bias for moral goods

Lea S. Svenningsen and Jette Bredahl Jacobsen

Journal of choice modelling, 2018, vol. 29, issue C, 17-32

Abstract: This paper explores how changes in survey design influence the conclusions reached from discrete choice models, a topic which is of particular interest in the context of stated and revealed preference comparisons investigating potential hypothetical bias. We systematically test the WTP of a good with no related market value, using two standard, hypothetical stated preference data collections and an incentivized stated preference data collection, using a real donation mechanism. The investigations into the nature of hypothetical bias typically involve changes in more than just the elicitation format. Therefore, we explicitly test the importance of changes in bid range, payment vehicle, and elicitation format upon the estimated hypothetical bias, while keeping the survey context constant. Our results show that depending on the characteristics of the good in question, the choice of payment vehicle, bid range and elicitation format may affect the results. In many cases, the importance of payment vehicle itself is negligible – especially when the good in question is distant to people. The implication of our study is that caution should be applied when conducting stated and revealed preference comparisons in the context of public good with strong moral components, as even very small design decisions may influence the observed WTP disparities.

Keywords: Choice experiment; Hypothetical bias; bid range; Elicitation format; Payment vehicle; Learning effects; Public good (search for similar items in EconPapers)
Date: 2018
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