An experimental test of the solemn oath in eliciting sincere preferences

Hypothetical bias is the gap between the hypothetical willingness to pay and the real economic payment. Subjects may overstate or understate their willingness to pay due to strategic behaviour. This bias is common in contingent valuation studies. In this study, we attempt to use a commitment device to correct the bias, in order to elicit sincere preferences. We use a solemn oath in second-price auctions, using both induced valuations and homegrown valuations. Using a random effect panel data model, we draw three conclusions: (1) there is a gap between subjects' bids and their true willingness to pay due to the violation of both the budget constraint and the participation constraint; (2) oaths in the induced value experiment can increase subjects' bids towards the induced value only given real monetary incentives; (3) oaths can modestly correct the hypothetical bias in the homegrown valuation experiment.