Framing for incentive compatibility in choice modelling

The incentives that motivate respondents to reveal their preferences truthfully havebeen a long-standing area of research in the non-market valuation literature. Anumber of studies have been undertaken to investigate incentive compatibility in nonmarketvaluation. Most of these used laboratory environments rather than fieldsurveys (e.g. Carson and Burton, 2008, Harrison, 2007, Lusk and Schroeder, 2004,Racevskis and Lupi, 2008). Only a few studies investigating incentive compatibilityhave considered multi-attribute public goods with an explicit provision rule in achoice experiment (Carson and Groves, 2007, Collins and Vossler, 2009, Carson andBurton, 2008).The design of a choice modelling study that avoids strategic behaviour has provenparticularly difficult because of multiple choices and difficulties in developing amajority voting provision rule.This study investigates the impact of the inclusion of a framing statement forincentive compatibility in a field survey choice modelling study. An incentivecompatible statement (provision rule) that sets out to respondents the rule relating towhen the good under consideration will be provided was employed. The impact of aprovision rule across three alternative choice modelling multiple choicequestionnaires was tested by comparing results between split samples with andwithout a provision rule. Four split samples were used to test the impact of a provisionrule on preferences across different communities including local/rural residents anddistant/urban residents. A choice modelling analysis that involved a conditional logitmodel and a random parameter model was used to elicit household willingness to payfor improvements in environmental quality in the Hawkesbury-Nepean catchment.The results of the study show that the inclusion of a provision rule had an effect onpreferences in the distant/urban communities. However, the impact of a provision rulein the local/rural community sub-samples was negligible. This study suggests that theimpact of a provision rule should be analysed in the context of different communitycharacteristics.