Home Business & Economics Hypothetical Bias in Choice Experiments: Is Cheap Talk Effective at Eliminating Bias on the Intensive and Extensive Margins of Choice?
Article
Licensed
Unlicensed Requires Authentication

Hypothetical Bias in Choice Experiments: Is Cheap Talk Effective at Eliminating Bias on the Intensive and Extensive Margins of Choice?

  • Ryan Bosworth EMAIL logo and Laura O. Taylor
Published/Copyright: December 12, 2012

Abstract

We use an experimental approach to evaluate the effectiveness of the most commonly employed bias-mitigation tool in nonmarket valuation surveys: the cheap talk script. Our experimental design allows us to estimate treatment effects on two margins of choice separately: the decision to enter the market at all (the extensive margin) and the choices among alternatives offered (the intensive margin). The key result of this study is to show that a cheap talk script appears to affect both margins in ways distinctly different than when choices involve actual payments. Specifically, participants in hypothetical choice experiments including cheap talk are more inclined to enter the market but are also more price-sensitive as compared to when payments are real. Interestingly, the average influence of cheap talk on market participation and price-sensitiveness could result in total willingness to pay (WTP) estimates that are similar to real payment treatments since the two effects identified act in opposite directions when computing WTP. However, they may do so by inducing behavior that is distinctly different than those of consumers facing real choices. Our results highlight that future reliance on cheap talk as a bias mitigation tool requires extensive testing for empirical regularities to gain any confidence that the tool can be effective, and under what circumstances.

Published Online: 2012-12-12

©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

Articles in the same Issue

  1. Frontiers Article
  2. On the Competitive Effects of Bidding Syndicates
  3. Advances Article
  4. Tax Morale and Compliance Behavior: First Evidence on a Causal Link
  5. A New Look into the Determinants of the Ecological Discount Rate: Disentangling Social Preferences
  6. Impacts of Family Size on the Family as a Whole: Evidence from the Developing World
  7. The Inequality Effects of a Dual Income Tax System
  8. Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing
  9. Contributions Article
  10. Cyclicality of Real Wages in Korea
  11. Graduating High School in a Recession: Work, Education, and Home Production
  12. A Group-based Wellness Intervention in the Laboratory
  13. Technology Inertia and the Benefits of Entry
  14. The Effect of Education on Equity Holdings
  15. Evaluating Patent Rights With Possible Patent Litigation
  16. The CPS Redesign's Effects on Measured Unemployment Duration in the Great Recession
  17. A Patent System with a Contingent Delegation Fee under Asymmetric Information
  18. The Economic Returns to Good Looks and Risky Sex in the Bangladesh Commercial Sex Market
  19. Timing of Retirement Plan Contributions and Investment Returns: The Case of Defined Benefit versus Defined Contribution
  20. Green Jobs and Renewable Electricity Policies: Employment Impacts of Ontario's Feed-in Tariff
  21. Equilibrium Vertical Integration with Complementary Input Markets
  22. The Role of Specific Subjects in Education Production Functions: Evidence from Morning Classes in Chicago Public High Schools
  23. Provision of Multilevel Public Goods by Positive Externalities: Experimental Evidence
  24. Stem Cell Donor Matching for Patients of Mixed Race
  25. When Educators Are the Learners: Private Contracting by Public Schools
  26. Human Capital Formation and Criminal Behavior: The Role of Early Childhood Education
  27. Experience Benefits and Firm Organization
  28. Regulating Unverifiable Quality by Fixed-Price Contracts
  29. Pseudo-Adversarialism: A Theoretical Comparison Between the U.S. and Japanese Criminal Procedures
  30. Asymmetric Information And Overeducation
  31. Competitive Mixed Bundling of Vertically Differentiated Products
  32. Therapeutic Equivalence and the Generic Competition Paradox
  33. Does Vertical Separation Necessarily Reduce Quality Discrimination and Increase Welfare?
  34. Doctors' Remuneration Schemes and Hospital Competition in a Two-Sided Market
  35. Corporate Social Responsibility for Irresponsibility
  36. Hypothetical Bias in Choice Experiments: Is Cheap Talk Effective at Eliminating Bias on the Intensive and Extensive Margins of Choice?
  37. Matching, Wage Rigidities and Efficient Severance Pay
  38. The Prostitute's Allure: The Return to Beauty in Commercial Sex Work
  39. The Impact of Inheritances on Heirs' Labor and Capital Income
  40. Determining Public Provision of Education Services in a Sequential Education Process
  41. Topics Article
  42. Demand-Based Cost-of-Children Estimates and Child Poverty
  43. Organizational Redesign, Information Technologies and Workplace Productivity
  44. The Effect of Neighborhood Diversity on Volunteering: Evidence From New Zealand
  45. Price-Dependent Demand in Spatial Models
  46. Optimal Taxation of Wealth Transfers When Bequests are Motivated by Joy of Giving
  47. Smaller Pie, Larger Slice: How Bargaining Power Affects the Decision to Bundle
  48. Collusion in a One-Period Insurance Market with Adverse Selection
  49. All-You-Can-Eat Buffet: Entry Price, the Fat Tax and Meal Cessation
  50. Forced Migration and the Effects of an Integration Policy in Post-WWII Germany
  51. The Effect of Mandated Exclusive Territories in the US Brewing Industry
  52. Learning-by-Exporting, Introduction of New Products, and Product Rationalization: Evidence from Korean Manufacturing
  53. Poverty, Informality and the Optimal General Income Tax Policy
  54. International Environmental Cooperation under Fairness and Reciprocity
  55. Determinants of Corruption: Government Effectiveness vs. Cultural Norms
  56. Does More Time Spent Calling Home Correlate with Higher Remittances? Evidence from Migrants in the State of Qatar
  57. Do Smart Growth Strategies Have a Role in Curbing Vehicle Miles Traveled? A Further Assessment Using Household Level Survey Data
  58. Ownership and Quality in Markets with Asymmetric Information: Evidence from Nursing Homes
  59. Constraints in the Demand for Education: What Can we Learn from Subjective Assessments?
  60. Education, Maternal Smoking, and the Earned Income Tax Credit
  61. Firms' Investment under Financial and Infrastructure Constraints: Evidence from In-House Generation in Sub-Saharan Africa
  62. Comparing Benefits and Total Compensation between Similar Federal and Private-Sector Workers
  63. Do Rising Top Income Shares Affect the Incomes or Earnings of Low and Middle-Income Families?
  64. Test Measurement Error and Inference from Value-Added Models
  65. Costs of Engaging in Corruption: Equilibrium with Extortion and Framing
  66. On the Relationship between Tariff Levels and the Nature of Mergers
  67. When Do Independent Distributors Undersupply Promotional Services?
  68. A Theory of Optimal Quality Reports with Inertia
Downloaded on 8.1.2026 from https://www.degruyterbrill.com/document/doi/10.1515/1935-1682.3278/html
Scroll to top button