Downward Hypothetical Bias in the Willingness to Accept Measure for Private Goods: Evidence from a Field Experiment
Document Type
Article
Date of Original Version
10-1-2021
Abstract
This paper documents a downward hypothetical bias in the willingness to accept measure for a private good using the Becker-DeGroot-Marschak (BDM) method. We first construct a theoretical framework that predicts an upward hypothetical bias for the willingness to pay and a downward hypothetical bias for the willingness to accept measure. Based on a field experiment on livestock trading in China, we compare four experiment treatments, including a hypothetical treatment wherein responses are not consequential, two consequential treatments with probabilistic implementation wherein responses have a 25% or 75% probability of being consequential, and a consequential treatment with full implementation wherein responses are 100% consequential. Consistent with our theoretical predictions, the empirical results show that respondents report significant lower (about 12% lower) values in the hypothetical treatment compared with the consequential treatment with full implementation using the willingness to accept measure. The reported values also increase as the implementation probability increases. Our study contributes to the research on hypothetical bias in the willingness to accept by allowing exogenous changes in the consequential probability.
Publication Title, e.g., Journal
American Journal of Agricultural Economics
Volume
103
Issue
5
Citation/Publisher Attribution
Liu, Pengfei, and Xiaohui Tian. "Downward Hypothetical Bias in the Willingness to Accept Measure for Private Goods: Evidence from a Field Experiment." American Journal of Agricultural Economics 103, 5 (2021). doi: 10.1111/ajae.12205.