Status quo bias and consumers’ willingness to pay for green electricity: A discrete choice experiment with real economic incentives

Abstract

An experiment based on the theory of status quo bias was conducted to determine whether the framing of an alternative option in multiple incentivized decision situations – whether it is the status quo position or not – will significantly affect the likelihood of participants choosing the framed option. 101 students of the Clausthal University of Technology participated in the described experiment. They were divided in different treatment groups: Status quo framing and neutral framing in both hypothetical and non-hypothetical decision situations. All participants were then randomly assigned to a modified discrete choice experiment set, which either included - or not included - a framed pre-existing status quo position. The status quo option was always chosen as the cheapest contract based on a lexicographic rule. A second purpose of the study is, whether differences in hypothetical and non-hypothetical scenarios can be observed. The results indicate no significant differences between neutral framing and status quo framing. The same accounts for hypothetical and non-hypothetical willingness to pay. These findings are consistent with earlier work on the hypothetical and non-hypothetical marginal willingness to pay in choice experiments by Carlsson and Martinsson (2001). These results imply that neither status quo bias nor hypothetical bias seem to affect changes in preferences. On a methodological aspect, the results imply that discrete choice experiments seem to be an appropriate method for eliciting individuals’ preferences, as there were no differences in preferences between treatments.