Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 94: SELF IMAGE AND CHOICE EXPERIMENTS: HYPOTHETICAL AND ACTUAL WILLINGNESS TO PAY

Olof Johansson-Stenman and Henrik Svedsäter ()
Additional contact information
Olof Johansson-Stenman: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG
Henrik Svedsäter: Department of Psychology, Göteborg University, Postal: Box 500, SE 405 30 GÖTEBORG

Abstract: This paper proposes that people derive utility from a positive self-image, influenced by ethical views, internal honesty, and consistency between sequential choices. A model is tested by conducting the same choice-experiment for two WWF-campaigns in three different contexts. It predicts that marginal WTP for contributions to these campaigns is highest when choices are hypothetical, lower in a real-money experiment that follows a hypothetical experiment, and lowest when real-money choices are made directly. Additionally, it predicts that marginal WTP decreases with the scale of financial incentives in a real-money experiment. The empirical results are consistent with these hypotheses.

Keywords: choice experiment; self-image; hypothetical and real WTP; cognitive dissonance; environmental valuation

JEL-codes: C91; D63

39 pages, March 28, 2003

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