Understanding Hypothetical Bias: An Enhanced Meta‐Analysis

Abstract

The presence of hypothetical bias (HB) associated with stated preference methods has garnered frequent attention in the broad literature trying to describe and understand human behavior, often seen in environmental valuation, marketing studies, transportation choices, medical research, and others. This study presents an updated meta‐analysis to explore the source of HB and methods to mitigate it. While previous meta‐analysis on this topic often involves a few dozen articles, this analysis includes 131 studies after reviewing over 500 published and unpublished articles. This enables the inclusion of several important factors that have not been investigated before. These include relatively recent willingness to pay elicitation methods such as choice experiments and the Turnbull lower bound estimator. Newly emerged HB reduction techniques such as consequentiality and certainty follow‐up treatments are also included. For explanatory variables that have been examined in previous studies, this analysis does not always report consistent findings. In particular, holding everything constant and contrary to commonly‐held beliefs, the method of auction does not offer much reduction to HB compared to more conventional methods such as a referendum vote. However, choice experiment, cheap talk, consequentiality and certainty follow‐up all significantly contributed to explaining and mitigating the magnitude of HB. These results help practitioners to understand HB's presence and choose appropriate methods for amelioration. The framework established through this study also enables future analyses targeted at understanding variations built upon one or multiple HB mitigation techniques.

Do consumers value hydroponics? Implications for organic certification

“…However, one of the limitations of CEs is the formation of hypothetical bias, which generally leads to an overstatement of what respondents say they would pay for the products (Abate, Mørkbak, & Olsen, 2018;Carlsson & Martinsson, 2001;Murphy et al, 2005). Hence, researchers have increasingly been using Real (nonhypothetical) CEs, which incorporate an incentive-compatible mechanism and real products (Penn & Hu, 2018). Generally, in RCEs, the tasks are incentivized by randomly selecting one of the them as binding once the respondent has completed the series of choice tasks (Alfnes et al, 2006;Chang, Lusk, & Norwood, 2009;Lusk & Schroeder, 2004;Yue & Tong, 2009).…”

Impacts of sellers’ responses to online negative consumer reviews: Evidence from an agricultural product

“…First, the two separate studies were conducted using online surveys. Although Penn and Hu (2018) have shown that online surveys do not produce more hypothetical bias compared to other survey modes, because consumers' purchasing intentions may not always translate into actual purchasing, an examination using actual transactions will help reduce the potential hypothetical bias in the current research result. Second, we analyzed the effect of rational and emotional seller responses.…”

Willingness to Pay for Rose Attributes: Helping Provide Consumer Orientation to Breeding Programs

“…This could create hypothetical bias-that is, a misrepresentation of preferences because of the lack of economic incentives (Harrison and Rutström, 2008). In an attempt to mitigate hypothetical bias, several techniques can be used with different degrees of success (Penn and Hu, 2018). In this study, subjects were given a "cheap talk" (Cummings and Taylor, 1999).…”