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Public resource allocation, strategic behavior, and status quo bias in choice experiments

Author

Listed:
  • Katherine Silz Carson

    (United States Air Force Academy)

  • Susan M. Chilton

    (Newcastle University Business School – Economics)

  • W. George Hutchinson

    (Queen’s University, Belfast MBC)

  • Riccardo Scarpa

    (Durham University Business School)

Abstract

Choice experiments, a survey methodology in which consumers face a series of choice tasks requiring them to indicate their most preferred option from a choice set containing two or more options are used to generate estimates of consumer preferences to determine the appropriate allocation of public resources to competing projects or programs. The analysis of choice-experimental data typically relies on the assumptions that choices of the non-status quo option are demand-revealing and choices of the status quo option are not demand-revealing, but, rather, reflect an underlying behavioral bias in favor of the status quo. This paper reports the results of an experiment demonstrating that both of those assumptions are likely to be invalid. We demonstrate that choice experiments for a public good are vulnerable to the same types of strategic voting that affect other types of multiple-choice voting mechanisms. We show that owing to the mathematics of choice-set design, what actually is strategic voting often is misinterpreted as a behavioral bias for the status quo option. Therefore, we caution against using current choice-experimental methodologies to inform policy making about public goods.

Suggested Citation

  • Katherine Silz Carson & Susan M. Chilton & W. George Hutchinson & Riccardo Scarpa, 2020. "Public resource allocation, strategic behavior, and status quo bias in choice experiments," Public Choice, Springer, vol. 185(1), pages 1-19, October.
  • Handle: RePEc:kap:pubcho:v:185:y:2020:i:1:d:10.1007_s11127-019-00735-y
    DOI: 10.1007/s11127-019-00735-y
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    References listed on IDEAS

    as
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    3. 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.

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    More about this item

    Keywords

    Choice experiment; Strategic voting; Status quo bias; Public goods experiment;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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