Hypothetical Bias and Certainty Calibration in a Value of Time Experiment



Hypothetical Bias and Certainty Calibration in a Value of Time Experiment

Authors

J-E Swärdh, Swedish National Road and Transport Research Institute (VTI) and Örebro University, SE

Description

This study is the first to analyze hypothetical bias in a willingness to pay for time context as well as certainty calibration of the value of time.Results show a tendency of a positive hypothetical bias & certainty calibration removes this tendency.

Abstract

This study is the first to analyze hypothetical bias in a willingness to pay for time context as well as certainty calibration of the value of time. Hypothetical and real actions are compared in an experimental setting where the subjects are given an offer to leave the experiment in advance by paying a given amount of cash.

Results of previous experiments to test hypothetical bias in the value of time mostly found that this bias is negative. This seemingly surprising result is explained by the existence of a time constraint in the utility maximization problem, which in these experimental designs caused scheduling constraints.

The results of this study show that there is a weak tendency of positive hypothetical bias in the willingness to pay for value of time, though this effect is not different from zero at conventional significance levels. The reason for this sign of the bias probably depends on the fact that no scheduling constraint occur in this experimental design.

Furthermore, the results show that the method of certainty calibration by using the information from a follow-up question where the subjects are self-stating their preference certainty of their hypothetical choice is found to succeed. When non-certain hypothetical subjects are compared to real subjects there is a significant positive hypothetical bias. However, when certain hypothetical subjects are compared with real subjects there is no evidence at all of a hypothetical bias. Hence, this result corroborates the finding in other fields that certainty calibration through a follow-up question is successful to elicit hypothetical values that is non-distinguishable from real values.

Publisher

Association for European Transport