Testing the effectiveness of certainty scales, cheap talk, and dissonance-minimization in reducing hypothetical bias in contingent valuation studies

Abstract

Stated preference methods such as contingent valuation and choice modeling are subject to various biases that may lead to differences between actual and hypothetical willingness to pay. Cheap talk, follow-up certainty scales, and dissonance minimization are three techniques for reducing this hypothetical bias. Cheap talk and certainty scales have received considerable attention in the literature, but dissonance minimization has not previously been experimentally tested. Using a four-way split sample design involving over 600 subjects, results from an actual referendum on provision of a quasi-public good were compared with three similar but contingent referenda employing the three bias-reducing techniques. Hypothetical bias was again present. Certainty scales, when properly calibrated, and dissonance minimization were found to be most effective in reducing the bias.

Citation

Morrison, Mark; Brown, Thomas C. 2009. Testing the effectiveness of certainty scales, cheap talk, and dissonance-minimization in reducing hypothetical bias in contingent valuation studies. Environmental and Resource Economics. 44(3): 307-326.