Inducing incentives to understate and to overstate willingness to pay within the open-ended and the dichotomous-choice elicitation formats: An experimental study

The subject of this paper is a laboratory experiment in which nearly 300 students were asked to state their willingness to pay (WTP) for an actual market good. Two elicitation methods were used: the open-ended (OE) and the dichotomous-choice (DC) formats. The results indicate that individuals respond to incentives in the predicted direction. Further, when an individual had an incentive to overstate his true WTP the DC format yielded higher estimates of WTP than the OE formal. When an individual is subjected to opposite incentives the tests suggest no behavioral differences between the two formats. (C) 1998 Academic Press.