Hypothetical bias in stated choice experiments

Abstract

The notion of hypothetical bias (HB) constitutes, arguably, the most fundamental issue in relation to the use of hypothetical survey methods. Whether or to what extent choices of survey participants and subsequent inferred estimates translate to real-world settings continues to be debated. While HB has been extensively studied in the broader context of contingent valuation, it is much less understood in relation to choice experiments (CE). While the number of CE studies has rapidly increased, the critical issue of HB has been studied in only a small fraction of CE studies. This paper provides macro-scale insights into the literature of CE and reviews the empirical evidence for HB in CE in various fields of applied economics as well as experimental psychology and behavioural neuroscience. Results suggest mixed evidence on the prevalence, extent and direction of HB as well as considerable context and measurement dependency. While HB is found to be an undeniable issue when conducting CEs, the empirical evidence on HB does not render CEs unable to represent real-world preferences. While health-related choice experiments often find negligible degrees of HB, experiments in consumer behaviour and transport domains suggest significant degrees of HB. Environmental valuation studies provide mixed evidence. Also, across these disciplines many studies display HB in their total willingness to pay estimates and opt-in rates but not in their hypothetical marginal rates of substitution (subject to scale correction). Further, recent findings in psychology and brain imaging studies identify neurocognitive mechanisms underlying HB that may explain some of the discrepancies and unexpected findings in the mainstream CE literature. Show more