On Misrepresentation of Altruistic Preferences in Discrete-Choice Experiments
By: Johansson, Per-Olov ; Kristrm, Bengt
Johansson, Per-Olov ; Kristrm, Bengt, On Misrepresentation of Altruistic Preferences in Discrete-Choice Experiments, Journal of Agricultural and Resource Economics, Volume 46, Issue 1, January 2021, Pages 126-133
The purpose of this note is to address a problem faced in using stated preference methods to estimate willingness to pay (WTP) for a project. The considered problem occurs under pure altruism. Even though an agent is equipped with well-behaved preferences, a conventional closed-ended (binary) valuation question may induce her to overrate or underrate her true WTP. On the other hand, an open-ended valuation format seemingly provides a correct answer, but such a format fails to be incentive compatible.