Augmenting short Cheap Talk scripts with a repeated Opt-Out Reminder in Choice Experiment surveys

Abstract

Abstract:Hypothetical bias remains a major problem when valuing non-market goods with stated preference methods. Originally developed for Contingent Valuation studies, Cheap Talk has been found to effectively reduce hypothetical bias in some applications, though empirical results are ambiguous. We discuss reasons why Cheap Talk may fail to effectively remove hypothetical bias, especially in Choice Experiments. In this light, we suggest augmenting Cheap Talk in Choice Experiments with a so-called Opt-Out Reminder. Prior to each single choice set, the Opt-Out Reminder explicitly instructs respondents to choose the opt-out alternative if they find the experimentally designed alternatives too expensive. In an empirical Choice Experiment survey we find the Opt-Out Reminder to significantly reduce total WTP and to some extent also marginal WTP beyond the capability of the Cheap Talk applied without the Opt-Out Reminder. This suggests that rather than merely adopting the Cheap Talk practice directly from Contingent Valuation, it should be adapted to fit the potentially different decision processes and repeated choices structure of the Choice Experiment format. Our results further suggest that augmenting Cheap Talk with a dynamic Opt-Out Reminder can be an effective and promising improvement in the ongoing effort to remedy the particular types of hypothetical bias that potentially continue to invalidate Choice Experiment surveys.

Willingness to pay for threatened and endangered marine species: a review of the literature and prospects for policy use

“…In other applications in which these mitigation schemes were used, stated CE and actual WTP were more aligned (List et al, 2006;Ready et al, 2010). Recently, Ladenburg and Olsen (2014) proposed a repeated opt-out reminder to be used in conjunction with cheap talk that was shown to reduce WTP in an empirical application involving preferences for re-establishing a stream in Copenhagen, Denmark.…”

Consumer preference for infant milk‐based formula with select food safety information attributes: Evidence from a choice experiment in China

“…In each choice set, the respondents were asked to choose one and only one option out of the three from each choice set. To control for hypothetical bias of choice experiment (Bello & Abdulai 2016;Mohammadi et al, 2017), a cheap talk script was used to remind consumers of their budget and that they have the option of not purchasing any IMF in a choice set (De-Magistris, Akaichi, & Youssef, 2016;Ladenburg & Olsen, 2014). Prior to being presented with the choice sets, respondents, were fully informed of the definition of each of the quality attributes and their corresponding levels.…”

“…The respondents were also informed that, except for these attributes in a choice set, the IMF products presented had no difference in appearance, taste, grade, or any other aspects. To control for hypothetical bias of choice experiment (Bello & Abdulai 2016;Mohammadi et al, 2017), a cheap talk script was used to remind consumers of their budget and that they have the option of not purchasing any IMF in a choice set (De-Magistris, Akaichi, & Youssef, 2016;Ladenburg & Olsen, 2014). (1)…”

Whatever the customer wants, the customer gets? Exploring the gap between consumer preferences and default electricity products in Germany

“…It is important to note that the purpose of this paper is not primarily to come up with a precise measure of willingness-topay for green electricity, but to present a joint test for the importance of different attributes and levels in explaining consumer choices in the electricity market, especially relative to current defaults. When interpreting these results and especially the specific values for WTP, it should be kept in mind that the answers to questions involving environmental issues can be subject to social desirability biases (Diekmann, 2006) and that there is a specialized stream of literature about the gap between hypothetical and real WTP (see for example Ladenburg and Olsen, 2010;List et al, 2006). While the indirect measurement of WTP in a conjoint experiment has some advantages over direct elicitation of WTP with regard to overcoming social desirability, our results are still based on an experimental setting and respondents did not actually have to pay the price that they indicated they would accept in their product choice.…”