Working Paper: CEPR ID: DP15809
Authors: Konrad B. Burchardi; Jonathan De Quidt; Selim Gulesci; Benedetta Lerva; Stefano Tripodi
Abstract: Researchers frequently use variants of the Becker-DeGroot-Marschak (BDM) mechanism to elicit willingness to pay (WTP). These variants involve numerous incentive-irrelevant design choices, some of which carry advantages for implementation but may deteriorate participant comprehension or trust in the mechanism, which are well-known problems with the BDM. We highlight three such features and test them in the field in rural Uganda, a relevant population for many recent applications. Comprehension is very high, and 86 percent of participants bid optimally for an induced-value voucher, with little variation across treatments. This gives confidence for similar applications, and suggests the comprehension-expediency trade-off is mild.
Keywords: Willingness to Pay; Becker-DeGroot-Marschak; Field Experiment
JEL Codes: C90; C93; D44; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| comprehension of mechanisms (D87) | high comprehension rates (Y50) |
| design features tested (C90) | comprehension (Y60) |
| elicitation mechanisms (C90) | optimal bidding (D44) |
| design features (response mode, price revelation, information about price distribution) (D47) | comprehension and bidding behavior (D44) |
| comprehension (Y60) | optimal bidding (D44) |