Can hypothetical questions reveal true values? A laboratory comparison of dichotomous choice and open-ended contingent values with auction values

Can hypothetical questions reveal true values ? An examination of the laboratory experimental literature examining contingent valuation (CV) lends some support for using open-ended hypothetical willingness to pay questions. However, experimental studies examining dichotomous choice have found that hypothetical answers overstate demand. Consistent with the experimental literature, published CV studies comparing open-ended to dichotomous choice questions have shown that values from the dichotomous choice method equal or exceed those of the open-ended method in every case. This paper presents a series of experiments employing more than 800 subjects to test this hypothesis for CV and compares the CV results to actual auction values in a single controlled experimental environment.