Cost-benefit analyses are routinely used by policy makers when designing environmental policy to weigh the costs and benefits of different policy alternatives against one another. Not all costs and benefits have market values and stated choice experiments are one non-market valuation technique used to elicit values in the absence of markets. Standard practice in stated choice experiments is to create a hypothetical market in which people choose among competing policy alternatives under the assumptions that they have complete information about all available policy alternatives, and that they are perfectly rational and maximize utility based on a clearly defined set of preferences, which can be retrieved when needed in any situation. In reality, these assumptions are questionable. Drawing on accumulating evidence from economics, psychology, and marketing, the INSPiRE project sought to understand how searching for information about policy alternatives affects stated preference formation, learning, and choice, and to what extent this could reduce hypothetical bias. The project developed a novel experimental design procedure where participants had to actively search for information by deciding at each decision point whether they wanted to see another alternative or make a choice between the alternatives already seen. This allowed us to track the information search process. Importantly, the decision to continue to search or not also reveals information about people’s preferences. Using this extra preference information when estimating people’s utility functions can lead to better and more precise estimates. With better estimates for how people value the non-marketed goods and services affected by a given policy decision, the better is the information for policy decision makers.
