Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks

Abstract

This study compares hypothetical and nonhypothetical responses to choice experiment questions. We test for hypothetical bias in a choice experiment involving beef ribeye steaks with differing quality attributes. In general, hypothetical responses predicted higher probabilities of purchasing beef steaks than nonhypothetical responses. Thus, hypothetical choices overestimate total willingness-to-pay for beef steaks. However, marginal willingness-to-pay for a change in steak quality is, in general, not statistically different across hypothetical and actual payment settings. Copyright 2004, Oxford University Press.

How well do discrete choice experiments predict health choices? A systematic review and meta-analysis of external validity

“…Indeed, the choice architecture surrounding real-world and hypothetical choices has been shown to affect choices, including healthy eating, physical activity, and alcohol use [23][24][25]. Furthermore, if DCEs are not incentive compatible, respondents may try and answer strategically, for example to understate their willingness to pay for public services [26,27]. Behavioral economic research challenges the theory that we are all variants of homo economicus, but there has been limited work exploring if behavioral heuristics influence preferences to a greater or lesser extent in stated preference tasks than in reality [28,29].…”

A fair share: Burden-sharing preferences in the United States and China

“…The empirical evidence of hypothetical bias in a choice experiment is mixed (see, e.g., Carlsson and Martinsson 2001;Lusk and Schroeder 2004;Johansson-Stenman and Svedsäter 2008). To reduce the probability of a hypothetical bias, following Carlsson et al (2005) and List et al (2005), we used a cheap-talk script, as follows:…”

Behavioral implications of providing real incentives in stated choice experiments

“…Rather, it would seem that another behavioural benefit of using real incentives could be a reduced tendency to use opting out as a heuristic. This is however in opposition to results in Lusk and Schroeder (2004), so more research on this issue is warranted. Another decision-making heuristic that could be causing the faster choice task responses obtained from respondents receiving the real incentive would be if respondents just made random choices, i.e.…”

“…One central criticism concerns the hypothetical nature of the methods which has been claimed to instigate respondents to overstate their 'true' willingness to pay (WTP) (see e.g. List et al 2006;Lusk and Schroeder 2004;Murphy et al 2005). Behavioural explanations offered for such overstatements relate to the fact that since respondents are not asked to actually pay the stated amounts out of their pockets, they have no incentives to answer truthfully -in accordance with their real preferences that is.…”

“…As a result, a number of choice experiment (CE) applications have incorporated real economic incentives in the experimental setup (e.g. Alfnes et al 2006;Carlsson and Martinsson 2001;Chang et al 2009;Gracia et al 2011;Grebitus et al 2013;Johansson-Stenman and Svedsäter 2012;Johansson-Stenman and Svedsäter 2008;List and Shogren 1998;Loomis et al 2009;Lusk and Schroeder 2004;Mentzakis and Zhang 2012;Neill et al 1994;Sinden 1988;Volinsky et al 2009;Yeu and Tong 2009). …”