Incentive Compatibility and the Consequences When It Is Missing: Experiments with Water Quality Credits Purchase

This article implemented four treatments to elicit preferences for a nonmarket 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.

• Publication year

  2021

• Venue

  Land Economics

• Publication date

  2021-10-08

• Fields of study

  Not labeled

• Identifiers
  DOI 10.3368/le.97.4.050920-0064r1
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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