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Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks
Author(s) -
Lusk Jayson L.,
Schroeder Ted C.
Publication year - 2004
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.0092-5853.2004.00592.x
Subject(s) - willingness to pay , quality (philosophy) , purchasing , payment , test (biology) , incentive , statistics , mathematics , econometrics , economics , operations management , microeconomics , paleontology , philosophy , epistemology , finance , biology
This study compares hypothetical and nonhypothetical responses to choice experiment questions. We test for hypothetical bias in a choice experiment involving beef ribeye steaks with differing quality attributes. In general, hypothetical responses predicted higher probabilities of purchasing beef steaks than nonhypothetical responses. Thus, hypothetical choices overestimate total willingness‐to‐pay for beef steaks. However, marginal willingness‐to‐pay for a change in steak quality is, in general, not statistically different across hypothetical and actual payment settings.