Mitigating hypothetical bias by defaulting to opt-out in an online choice

Jerrod Penn and Wuyang Hu

Applied Economics, 2021, vol. 53, issue 3, 315-328

Abstract: Hypothetical Bias (HB) is an ongoing concern for welfare estimates generated from stated preference approaches. Employing a default option has been shown to affect decision-making and outcomes in a variety of settings. We implement a split-sample design to study the effect of setting the opt-out alternative as a default choice in a Choice Experiment. Our results show that making the opt-out a default significantly decreases the willingness to pay for attributes, indicative of the presence and mitigation of potential HB. Defaulting to the opt-out alternative also causes considerable shifts in the rank of value among the attributes. This study is conducted in the context of proactive protection against bed bugs, an understudied but vexing issue to resource and recreation management as well as to the broader hospitality industry.

Date: 2021
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DOI: 10.1080/00036846.2020.1808172

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