Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/112990
Authors: 
Frondel, Manuel
Andor, Mark
Vance, Colin
Year of Publication: 
2015
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Microeconometrics B04-V1
Abstract: 
The overestimation of willingness-to-pay (WTP) in hypothetical responses is a well-known finding in the literature. Various techniques have been proposed to remove or, at least, reduce this bias. Using about 30,000 responses on WTP for a variety of power mixes from a panel of 6,500 German households, this article simultaneously explores the effects of two common ex-ante approaches -- cheap talk and consequential script -- and the ex-post certainty approach to calibrating hypothetical WTP responses. Based on a switching regression model that accounts for the potential endogeneity of respondent certainty and controlling for unobserved heterogeneity using a fixed-effects estimator, we find evidence for a lower WTP among those respondents who classify themselves as definitely certain about their answers. While neither cheap talk nor the consequential-script corrective reduce WTP estimates, receiving either of these scripts increases the probability that respondents indicate definite certainty about their WTP bids.
JEL: 
C01
C24
Q41
Document Type: 
Conference Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.