RT Journal Article
SR Electronic
T1 Incentive Compatibility and the Consequences when it is Missing: Experiments with Water Quality Credits Purchase
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 050920-0064R1
DO 10.3368/le.97.4.050920-0064R1
A1 Liu, Pengfei
A1 Swallow, Stephen K.
YR 2021
UL http://le.uwpress.org/content/early/2021/09/28/le.97.4.050920-0064R1.abstract
AB This paper implemented four treatments to elicit preferences for a non-market good, including (1) a hypothetical referendum, (2) a real referendum lacking incentive compatibility, (3) a real choice with incentive compatibility, and (4) a hybrid approach based on (2) and (3). We develop a method to estimate the probability that observed choices do not identify the highest-utility alternative in a choice question. We find that in the hypothetical referendum, the estimated percentage of individuals choosing the alternative that gives the highest utility is the lowest among the treatments. Adding policy consequentiality or payment consequentiality increases the percentage of truthful responses.