Donation payment mechanisms and contingent valuation: An empirical study of hypothetical bias

Abstract

Donation payment mechanisms are well suited for some contingent valuation studies. In an effort to better understand the discrepancy that has been consistently found between actual and hypothetical donations, we investigate an approach to estimating actual willingness to donate using contingent donations with a follow-up question in which respondents rate the level of certainty about their response to the contingent donation question. The approach allows us to estimate the magnitude of the hypothetical bias and identify the respondents responsible for the bias. Identification of the respondents responsible for the hypothetical bias is the first step toward developing an understanding of the causes and possible remedies. In this study we find that most of the respondents (80%) to the contingent donation question provide a response consistent with how we predict they would respond in an actual donation situation.