Hypothetical Surveys and Real Economic Commitments

We provide controlled laboratory evidence that open-ended hypothetical surveys do not always accurately elicit real economic commitments from individuals. Such surveys have been proposed and used in benefits assessment in cases of public cost-benefit analysis as well as environmental litigation. We argue that they can provide biased measures of true values, where the latter are elicited using incentive compatible institutions. We also evaluate if it is the hypothetical payment aspect of these surveys which results in these biases or the lack of explicitly incentive-compatible provision rules. We conclude that it is the former. We are unable to devise a hypothetical survey that uses an incentive-compatible provision rule to elicit valuations that are demonstrably truthful.