Demand Revelation, Hypothetical Bias, and Threshold Public Goods Provision

Abstract

We examine the issues of hypothetical bias, demand revelation, and gender differences in a threshold public goods experiment with heterogeneous induced-values. First, we find no evidence of hypothetical bias in our threshold provision public goods experiments, despite the fact this is an open-ended type mechanism. Our results support recent experimental findings that use induced-values to investigate hypothetical bias. Second, we investigate the demand revealing performance of real and hypothetical payments and find no evidence that real payment performs better than hypothetical payment in our experiments. Third, we examine whether payments, real and hypothetical, are positively related to induced-values. Our results suggest there is statistical evidence that payments are positively related to true values. Finally, we examine the effect of gender on real and hypothetical payments in our experiment. The results show that gender matters for contributions through both real and hypothetical payments, after controlling for true values as well as socio-economic variables. Results also indicate that females are more likely to truthfully reveal their value than males through hypothetical payments, but gender is not significant for truthfully revealing their value through real payments.