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Hypothetical Bias Reconsidered: Payment and Provision Uncertainties in a Threshold Provision Mechanism

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  • Yohei Mitani
  • Nicholas Flores

Abstract

We extend research on the consequentiality of stated preference choices to a threshold provision mechanism for public goods. We develop a simple theoretical model of option price to analyze how option price varies with payment and provision uncertainty. We explore whether threshold provision contributions are similarly influenced by payment and provision uncertainty using an induced value contribution experiment. Results suggest that: (1) the probability of payment has a negative effect on contributions; (2) the probability of provision has a positive effect on contributions. We offer subjective beliefs regarding payment and provision as a plausible systematic explanation for hypothetical bias. Copyright Springer Science+Business Media Dordrecht 2014

Suggested Citation

  • Yohei Mitani & Nicholas Flores, 2014. "Hypothetical Bias Reconsidered: Payment and Provision Uncertainties in a Threshold Provision Mechanism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(3), pages 433-454, November.
    • Handle: RePEc:kap:enreec:v:59:y:2014:i:3:p:433-454
    DOI: 10.1007/s10640-013-9741-0
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    Cited by:

    1. Roy Brouwer & Solomon Tarfasa, 2020. "Testing hypothetical bias in a framed field experiment," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(3), pages 343-357, September.
    2. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part I. Macro-scale analysis of literature and integrative synthesis of empirical evidence from applied economics, experimental psychology and neuroimag," Journal of choice modelling, Elsevier, vol. 41(C).
    3. Zawojska, Ewa & Bartczak, Anna & Czajkowski, Mikołaj, 2019. "Disentangling the effects of policy and payment consequentiality and risk attitudes on stated preferences," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 63-84.
    4. Crastes dit Sourd, Romain & Zawojska, Ewa & Mahieu, Pierre-Alexandre & Louviere, Jordan, 2018. "Mitigating strategic misrepresentation of values in open-ended stated preference surveys by using negative reinforcement," Journal of choice modelling, Elsevier, vol. 28(C), pages 153-166.
    5. Datta, Nikhil, 2019. "Willing to pay for security: a discrete choice experiment to analyse labour supply preferences," LSE Research Online Documents on Economics 103390, London School of Economics and Political Science, LSE Library.
    6. Zawojska, Ewa & Bartczak, Anna & Czajkowski, Mikotaj, 2017. "Disentangling impacts of payment and provision consequentiality and risk attitudes on stated preferences," Annual Meeting, 2017, June 18-21, Montreal, Canada 258602, Canadian Agricultural Economics Society.
    7. Daniel A. Brent & Lata Gangadharan & Anke D. Leroux & Paul A. Raschky, 2022. "Reducing bias in preference elicitation for environmental public goods," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(2), pages 280-308, April.
    8. Zawojska Ewa, 2017. "A Consequential Contingent Valuation Referendum: Still Not Enough to Elicit True Preferences for Public Goods!," Central European Economic Journal, Sciendo, vol. 2(49), pages 73-90, December.
    9. Tobias Börger & Tenaw G. Abate & Margrethe Aanesen & Ewa Zawojska, 2021. "Payment and Policy Consequentiality in Dichotomous Choice Contingent Valuation: Experimental Design Effects on Self-Reported Perceptions," Land Economics, University of Wisconsin Press, vol. 97(2), pages 407-424.
    10. Milad Haghani & Michiel C. J. Bliemer & John M. Rose & Harmen Oppewal & Emily Lancsar, 2021. "Hypothetical bias in stated choice experiments: Part II. Macro-scale analysis of literature and effectiveness of bias mitigation methods," Papers 2102.02945, arXiv.org.
    11. Jie He & Jérôme Dupras & Franck Ndefo & Thomas Poder, 2020. "Payment and provision consequentiality in voluntary contribution mechanism: separate or joint effects?," Letters in Spatial and Resource Sciences, Springer, vol. 13(1), pages 11-36, April.
    12. Nikhil Datta, 2019. "Willing to pay for security: a discrete choice experiment to analyse labour supply preferences," CEP Discussion Papers dp1632, Centre for Economic Performance, LSE.
    13. Jerrod Penn & Wuyang Hu, 2023. "Adjusting and Calibrating Elicited Values Based on Follow-up Certainty Questions: A Meta-analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(4), pages 919-946, April.
    14. Jiang, Qi & Penn, Jerrod & Hu, Wuyang, 2022. "Real payment priming to reduce potential hypothetical bias," Journal of choice modelling, Elsevier, vol. 45(C).
    15. Jie He & Jérôme Dupras & Thomas G. Poder, 2018. "Payment and Provision Consequentiality in Voluntary Contribution Mechanism: Single or Double “Knife-Edge” Evidence?," Cahiers de recherche 18-02, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    16. Guevara, C. Angelo & Figueroa, Esteban & Munizaga, Marcela A., 2021. "Paving the road for electric vehicles: Lessons from a randomized experiment in an introduction stage market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 153(C), pages 326-340.
    17. Pengfei Liu & Xiaohui Tian, 2021. "Downward Hypothetical Bias in the Willingness to Accept Measure for Private Goods: Evidence from a Field Experiment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1679-1699, October.

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    More about this item

    Keywords

    Hypothetical bias; Induced-values; Payment uncertainty; Provision uncertainty; Stated preferences; Threshold public goods game; C91; H41; Q51;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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