HAL : halshs-00526134, version 1

DOI : 10.1111/j.1467-9779.2011.01522.x

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Journal of Public Economic Theory 13, 5 (2011) 857-882

Do people always pay less than they say? Testbed laboratory experiments with IV and HG values

Nicolas Jacquemet 1, 2, Robert-Vincent Joule 3, Stephane Luchini 4, Jason Shogren 5

(2011)

Hypothetical bias is a long-standing issue in stated preference and contingent valuation studies - people tend to overstate their preferences when they do not experience the real monetary consequences of their decision. This view, however, has been challenged by recent evidence based on the elicitation of induced values (IV) in the lab and homegrown (HG) demand function from different countries. This paper uses an experimental design to assess the extent and relevance of hypothetical bias in demand elicitation exercises for both IV and HG values. For testbed purpose, we use a classic second-price auction to elicit preferences. Comparing the demand curve we elicit in both, hypothetical bias unambiguously (i) vanishes in an induced-value, private good context, and (ii) persists in homegrown values elicitation context. This suggests hypothetical bias in preference elicitation appears to be driven by "preference formation" rather than "preference elicitation". In addition, companion treatments highlight two sources of the discrepancy observed in the HG setting: the hypothetical context leads bidders to underestimate the constraints imposed by their budget limitations, whereas the real context creates pressure leading them to bid "zero" to opt out from the elicitation mechanism. As a result, there is a need for a demand elicitation procedure that helps subjects take the valuation exercise sincerely, but without putting extra pressure on them.

1 :	Centre d'économie de la Sorbonne (CES)
	CNRS : UMR8174 – Université Paris I - Panthéon-Sorbonne
2 :	Ecole d'Économie de Paris - Paris School of Economics (EEP-PSE)
	Ecole d'Économie de Paris
3 :	Laboratoire de Psychologie Sociale (LPS-AIX)
	Université de Provence - Aix-Marseille I : EA849
4 :	Groupement de Recherche en Économie Quantitative d'Aix-Marseille (GREQAM)
	Université de la Méditerranée - Aix-Marseille II – Université Paul Cézanne - Aix-Marseille III – École des Hautes Études en Sciences Sociales [EHESS] – CNRS : UMR6579
5 :	Departement Economy and Finance, University of Wyoming
	University of Wyoming

Discipline

:

Sciences de l'Homme et Société/Economies et finances

Mots-Clés : Auctions – Demand revelation – Experimental valuation – Hypothetical bias

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Contributeur : Nicolas Jacquemet <>

Soumis le : Mardi 25 Octobre 2011, 18:39:19

Dernière modification le : Mercredi 26 Octobre 2011, 11:27:18