Can Hypothetical Questions Reveal True Values? A Laboratory Comparison of Dichotomous Choice and Open-Ended Contingent Values with Auction Values

Can hypothetical questions reveal true values? An examination of thelaboratory experimental literature examining contingent valuation (CV)lends some support for using open-ended hypothetical willingness to payquestions. However, experimental studies examining dichotomous choicehave found that hypothetical answers overstate demand. Consistent withthe experimental literature, published CV studies comparing open-ended todichotomous choice questions have shown that values from the dichotomouschoice method equal or exceed those of the open-ended method in everycase. This paper presents a series of experiments employing more than 800subjects to test this hypothesis for CV and compares the CV results toactual auction values in a single controlled experimental environment. Copyright Kluwer Academic Publishers 2001