An Investigation of Individual Preferences: Consistency Across Incentives and Stability Over Time
University of Zurich Department of Economics Working Paper No. 70
33 Pages Posted: 12 Apr 2012
Date Written: April 1, 2012
Abstract
This study compares individual preferences across incentives (i.e., hypothetical vs. real incentives) and over time (i.e. elicitation at two different points in time) in a choice experiment involving charitable donating decisions. We provide evidence of hypothetical bias but little evidence of instability of individual giving. There is significant heterogeneity in individual preferences, with real incentives either dampening or pronouncing the observed donating behaviour. Neither hypothetical bias nor instability is observed when we examine the propensity of individuals to make internally consistent decisions over identical choices.
Keywords: Individual preference, hypothetical bias, time inconsistency, discrete choice experiments, charitable donations
JEL Classification: C91, D11, D91, H40
Suggested Citation: Suggested Citation