WHAT'S TO KNOW ABOUT HYPOTHETICAL BIAS IN STATED PREFERENCE VALUATION STUDIES?

Hypothetical bias arises in stated preference valuation studies when respondents report a willingness to pay (WTP) that exceeds what they actually pay using their own money in laboratory or field experiments. Although this bias is not found in all stated preference surveys, hypothetical WTP typically exceeds the actual value by a factor of two to three. Unfortunately, there is no widely accepted general theory of respondent behaviour that explains hypothetical bias. Therefore, two meta-analyses are reviewed to test current hypotheses regarding the causes of this overstatement of WTP and the associated recommendations to mitigate the bias. Suggestions for future research are made including the development of a general theory.