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Public resource allocation, strategic behavior, and status quo bias in choice experiments

  • Katherine Silz CarsonEmail author
  • Susan M. Chilton
  • W. George Hutchinson
  • Riccardo Scarpa
Article
  • 88 Downloads

Abstract

Choice experiments, a survey methodology in which consumers face a series of choice tasks requiring them to indicate their most preferred option from a choice set containing two or more options are used to generate estimates of consumer preferences to determine the appropriate allocation of public resources to competing projects or programs. The analysis of choice-experimental data typically relies on the assumptions that choices of the non-status quo option are demand-revealing and choices of the status quo option are not demand-revealing, but, rather, reflect an underlying behavioral bias in favor of the status quo. This paper reports the results of an experiment demonstrating that both of those assumptions are likely to be invalid. We demonstrate that choice experiments for a public good are vulnerable to the same types of strategic voting that affect other types of multiple-choice voting mechanisms. We show that owing to the mathematics of choice-set design, what actually is strategic voting often is misinterpreted as a behavioral bias for the status quo option. Therefore, we caution against using current choice-experimental methodologies to inform policy making about public goods.

Keywords

Choice experiment Strategic voting Status quo bias Public goods experiment 

JEL Classification

H41 C91 C92 

Notes

Compliance with ethical standards

Conflict of interest

Hutchinson: Employed as a consultant by Northern Ireland Electricity Networks Ltd in connection with the preparation of the 6th Price Control Agreement (RP6) with The Office of the Utility Regulator NI (Final Determination 30th June 2017). Study is cited herein as Queen’s University Belfast and Perceptive Insight (2015). Scarpa: Served as lead consultant in the design of the survey instruments and the choice data analysis for the study for the Australian Energy Market Operator cited herein.

Human and animal rights

This research involves human participants. The experiments reported herein were conducted under the oversight of the United States Air Force Academy Institutional Review Board, protocol number FAC20130036H.

Informed consent

All participants provided signed informed consent prior to participating in this research.

Supplementary material

11127_2019_735_MOESM1_ESM.pdf (126 kb)
Supplementary material 1 (PDF 125 kb)

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Economics and GeosciencesUnited States Air Force AcademyUSAF AcademyUSA
  2. 2.Newcastle University Business School – EconomicsNewcastle upon TyneUK
  3. 3.Gibson Institute for Land, Food and Environment, Institute for Global Food Security, CRC Centre of Excellence for Public HealthQueen’s University, Belfast MBCBelfastUK
  4. 4.Durham University Business SchoolDurhamUK

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