Consequentiality, Elicitation Formats, and the Willingness to Pay for Green Electricity: Evidence from Germany

Abstract

Based on hypothetical responses from a large-scale survey among about 6,000 German households, this study investigates the discrepancy in willingness-to-pay (WTP) estimates for green electricity across single-binary-choice and open-ended valuation formats. Recognizing that respondents self-select into two groups distinguished by their beliefs in their answers’ consequences for policy making, we use a switching regression model that accounts for the potential endogeneity of respondents’ beliefs in consequences and biases from sample selectivity. Contrasting with the received literature, we find that WTP bids tend to be higher among those respondents who received questions in the open-ended, rather than in the single-binary-choice format.