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

Mark Andor, Manuel Frondel and Colin Vance

No 480, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: The overestimation of willingness-to-pay (WTP) in hypothetical responses is a wellknown finding in the literature. Various techniques have been proposed to remove or, at least, reduce this bias. Using responses from a panel of about 6,500 German households on their WTP for a variety of power mixes, this article undertakes an analysis that combines two common ex-ante approaches - cheap talk and consequential script - with 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, we find that while neither the cheap-talk nor the consequential script corrective bears on the estimates of WTP, there is evidence for a lower WTP among those respondents who classify themselves as definitely certain about their answers.

Keywords: willingness-to-pay; cheap talk; certainty approach (search for similar items in EconPapers)
JEL-codes: D12 Q21 Q41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene
Date: 2014
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https://www.econstor.eu/bitstream/10419/97139/1/785291784.pdf (application/pdf)

Related works:
Journal Article: Mitigating Hypothetical Bias: Evidence on the Effects of Correctives from a Large Field Study (2017) Downloads
Working Paper: Mitigating Hypothetical Bias: Evidence on the Effects of Correctives from a Large Field Study (2015) Downloads
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