Preference Elicitation Under Oath
39 Pages Posted: 8 Apr 2011 Last revised: 25 Jun 2013
Date Written: November 5, 2010
Eliciting sincere preferences for non-market goods remains a challenge due to hypothetical bias – the gap between hypothetical monetary values and real economic commitments. The gap arises because people either overstate hypothetical values or understate real commitments or a combination of both. Herein we examine whether the traditional real-world institution of the solemn oath can improve preference elicitation. Applying the social psychology theory on the oath as a truth-telling-commitment device, we ask our bidders to swear on their honour to give honest answers prior to participating in an incentive-compatible second-price auction. The oath is an ancillary mechanism to commit bidders to bid sincerely in a second-price auction. Results from our induced valuation testbed treatments suggest the oath-only auctions outperform all other auctions (real and hypothetical). In our homegrown valuation treatments eliciting preferences for dolphin protection, the oath-only design induced people to treat as binding both their budget constraint (i.e., lower values on the high end of the value distribution) and participation constraint (i.e., positive values in place of the zero bids used to opt out of auction). Based on companion treatments, we show the oath works through an increase in the willingness to tell the truth, due to a strengthening of the intrinsic motivation to do so.
Keywords: Oath, Commitment, Vickrey auction, Hypothetical Bias, Induced Values, Homegrown Values
JEL Classification: C9, H4, Q5
Suggested Citation: Suggested Citation