Strategic response to a sequence of discrete choice questions

According to neoclassical economic theory, the only stated preferenceelicitation format that can feasibly be employed in field studies to which truthful responsecan be the dominant strategy for all respondents is a single binary choice between thestatus quo and one alternative. In studies where the objective is estimation of preferencesfor multiple attributes of a good, it is preferred (and, in some cases, necessary) based oneconometric considerations, to present respondents with a sequence of choice tasks.Economic theory predicts that utility-maximising respondents may find it optimal tomisrepresent their preferences in this elicitation format. In this paper, the effect on statedpreferences of expanding the number of choice tasks per respondent from one to four istested using a split sample treatment in an attribute-based survey relating to theundergrounding of overhead electricity and telecommunications wires in the AustralianCapital Territory. We find evidence to suggest that presenting multiple choice tasks perrespondent decreases estimates of total willingness to pay and that this effect is related tothe ordering of cost levels presented over the sequence of choice tasks. Two behaviouralexplanations can be advanced - a weak cost minimisation strategy, which impliesdivergence between stated and true preferences, and a ‘good deal / bad deal’ heuristic, inwhich stated preferences reflect true preferences that change over the course of thesequence of choice tasks. Preferences stated in the first of a sequence of choice tasks arenot significantly different from those stated in the incentive compatible single binarychoice task. A key objective of future research will be to establish whether this effectbecomes less prevalent as the number of attributes and alternatives per choice task areincreased.