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 the laboratory experimental literature examining contingent valuation (CV) lends some support for using open ended hypothetical willingness to pay questions. However, experimental studies examining dichotomous choice have found that hypothetical answers overstate demand. Consistent with the experimental literature, published CV studies comparing open-ended to dichotomous choice questions have shown that values from the latter method equal or exceed those of the former in every case. This paper presents a series of experiments employing more than 800 subjects to test this hypothesis for CV and compares the CV results to actual auction values in a single controlled experimental environment.