Abstract
Significant difference between response to real and hypothetical valuation questions is often referred to as hypothetical bias. Some economists have had success with using “cheap talk” (which entails reading a script that explicitly highlights the hypothetical bias problem before participants make any decisions) as a means of generating unbiased responses in a referendum format. In this article, we test the robustness of cheap talk using a voluntary contribution mechanism with a provision point over a wide range of possible payment amounts. Our results confirm the existence of hypothetical bias, and suggest that cheap talk may eliminate hypothetical bias, but only for respondents facing higher payments.
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JEL classifications: C9, Q26, H41
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Murphy, J.J., Stevens, T. & Weatherhead, D. Is Cheap Talk Effective at Eliminating Hypothetical Bias in a Provision Point Mechanism?. Environ Resource Econ 30, 327–343 (2005). https://doi.org/10.1007/s10640-004-4224-y
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DOI: https://doi.org/10.1007/s10640-004-4224-y