Does a promise script work to reduce the hypothetical bias? Evidence from an induced value experiment

Abstract

This paper explores whether a truth-telling promise can work to reduce the hypothetical bias in preference elicitation. Using an induced value experiment in China with a random nth-price auction, the author finds: 1) Hypothetical bias exists in a random nth-price auction with induced values and making a truth-telling promise can reduce the hypothetical bias. 2) All treatments are demand-revealing except for the hypothetical baseline.

Keywords

• hypothetical bias
• oath
• random nth-price auction
• induced value experiment
• c90
• d44
• q51