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The influence of cheap talk on willingness-to-pay ranges: some empirical evidence from a contingent valuation study

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  • Pierre-Alexandre Mahieu
  • Pere Riera
  • Marek Giergiczny

Abstract

Different instruments have been developed to mitigate the hypothetical bias in contingent valuation surveys. One, labelled ‘cheap talk’, warns participants about the hypothetical bias phenomenon prior to the valuation question. This paper investigates the effects of cheap talk on willingness-to-pay ranges, in a case study on remote mountain lakes. An open-ended follow-up question is added to a payment ladder to elicit the maximum amount an individual would definitely pay and the minimum amount above which they would definitely refuse to pay. The main conclusion is that cheap talk has no influence on the width of people’s willingness-to-pay range, but is effective at lowering the mean willingness-to-pay.

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  • Pierre-Alexandre Mahieu & Pere Riera & Marek Giergiczny, 2012. "The influence of cheap talk on willingness-to-pay ranges: some empirical evidence from a contingent valuation study," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 55(6), pages 753-763, September.
    • Handle: RePEc:taf:jenpmg:v:55:y:2012:i:6:p:753-763
    DOI: 10.1080/09640568.2011.626524
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    References listed on IDEAS

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    1. Samnaliev, Mihail & Stevens, Thomas H. & More, Thomas, 2003. "A Comparison Of Cheap Talk And Alternative Certainty Calibration Techniques In Contingent Valuation," Working Paper Series 14517, University of Massachusetts, Amherst, Department of Resource Economics.
    2. Carlsson, Fredrik & Martinsson, Peter & Akay, Alpaslan, 2011. "The effect of power outages and cheap talk on willingness to pay to reduce outages," Energy Economics, Elsevier, vol. 33(5), pages 790-798, September.
    3. Pierre-Alexandre Mahieu, 2010. "Does gender matter when using cheap talk in contingent valuation studies?," Economics Bulletin, AccessEcon, vol. 30(4), pages 2955-2961.
    4. Belyaev, Yuri & Kriström, Bengt, 2010. "Approach to Analysis of Self-Selected Interval Data," CERE Working Papers 2010:2, CERE - the Center for Environmental and Resource Economics.
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