Information Effects in Contingent Markets

Abstract

Abstract Information “bias” in contingent markets is poorly understood. In this paper, testable hypotheses concerning beneficial contingent market information effects are developed conceptually. Perspective information and relative expenditure information were expected to increase comprehension and increase bids. Provision cost information was expected to counteract free‐riding behavior and also increase bids. Hypothesis tests using experimental markets suggested that each information type induced small, statistically insignificant bid increases. However, the combined effect of the three information types induced a desirable, statistically significant increase in bids. This result supports the contention that not all contingent market information effects are “biases.”