Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks

TLDR

The study compares hypothetical and nonhypothetical responses in a choice experiment on beef ribeye steaks with varying quality attributes to test for hypothetical bias. Researchers conducted a choice experiment presenting participants with beef ribeye steak options differing in quality attributes and measured their stated preferences under both hypothetical and actual payment scenarios. Results show that hypothetical responses predict higher purchase probabilities and greater total willingness‑to‑pay for beef steaks, yet the marginal willingness‑to‑pay for quality changes is statistically similar between hypothetical and actual payment settings.

Abstract

This study compares hypothetical and nonhypothetical responses to choice experiment questions. We test for hypothetical bias in a choice experiment involving beef ribeye steaks with differing quality attributes. In general, hypothetical responses predicted higher probabilities of purchasing beef steaks than nonhypothetical responses. Thus, hypothetical choices overestimate total willingness‐to‐pay for beef steaks. However, marginal willingness‐to‐pay for a change in steak quality is, in general, not statistically different across hypothetical and actual payment settings.