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fMRI Evidence of a Hot-Cold Empathy Gap in Hypothetical and Real Aversive Choices

“…However, many studies in behavioral economics have shown a substantial, systematic gap: typically, hypothetical valuations are greater than real valuations (Cummings et al, 1995;Johannesson et al, 1998;List and Gallet, 2001;Ariely and Wertenbroch, 2002;Little and Berrens, 2004;Murphy et al, 2005;Blumenschein et al, 2007;Tanner and Carlson, 2009). To remedy this typical upward "Yes" bias, in marketing research conjoint analysis using hypothetical preference data has been extended and improved through hybrid incentive-aligned methods in which an inferred choice will be implemented for real (Ding et al, 2005;Ding, 2007;Dong et al, 2010).…”

“…In public economics and political science, survey data are used to establish the dollar value of goods that are not traded in markets (such as clean air or the prevention of oil spills), and to poll likely voters before an election (Crespi, 1989;Diamond and Hausman, 1994;Carson et al, 1996;Mortimer and Segal, 2008). Hypothetical choices are also necessary in some types of psychology and neuroscience experiments in which measuring real choices is impractical or unethical, especially in the domain of distressing moral choices (Greene et al, 2001(Greene et al, , 2004Kühberger et al, 2002;Hariri et al, 2006;Monterosso et al, 2007).The reliance on hypothetical choice data presumes either that hypothetical choices are a good and legitimate way to forecast real choices, or that there is some knowable relationship between the two types of choices, such that the hypothetical data can be adjusted to forecast real choice data accurately.Abbreviations: WTP, willingness-to-pay; CS, consumer surplus.However, many studies in behavioral economics have shown a substantial, systematic gap: typically, hypothetical valuations are greater than real valuations (Cummings et al, 1995;Johannesson et al, 1998;List and Gallet, 2001;Ariely and Wertenbroch, 2002;Little and Berrens, 2004;Murphy et al, 2005;Blumenschein et al, 2007;Tanner and Carlson, 2009). To remedy this typical upward "Yes" bias, in marketing research conjoint analysis using hypothetical preference data has been extended and improved through hybrid incentive-aligned methods in which an inferred choice will be implemented for real (Ding et al, 2005;Ding, 2007;Dong et al, 2010).…”

Testing the effectiveness of the oath script in reducing the hypothetical bias in the Contingent Valuation Method

“…They also reported that the effect of the hypothetical bias was considerably lower for private goods compared to public goods. By the same token, Murphy et al (2005) also carried out a meta-analysis of 28 studies and reinforced the findings of List and Gallet (2001) by showing that the mean ratio of the hypothetical to actual values is around 1.35 and that the bias increased when public goods were valued.…”

“…It is well known that the hypothetical bias occurs when the individuals overstate their willingness to pay (WTP) in the hypothetical settings due to, among others, the lack of economic incentive to reveal their true valuations (List and Gallet 2001;Murphy et al 2005). List and Gallet (2001) conducted a meta-analysis of 29 experimental studies which revealed that the subjects in average overstate their preferences by a factor of 3 in hypothetical settings. They also reported that the effect of the hypothetical bias was considerably lower for private goods compared to public goods.…”

Competition and Cooperation in Economics and Business

“…In order to reveal the truthful answer, the surveyors used familiar terms related to farming activities in eliciting time preference; for instance, the time sign used in the questionnaire was planting period instead of month. The use of familiar language was inspired by List and Gallet (2001) who found that true preference is more likely to be stated when performing a familiar hypothetical task rather than an unfamiliar one.…”