The Becker-deGroot-Marshak method will be applied by allowing individuals who will not accept a free meter to select a value that they would be willing to accept (WTA) as compensation for having a smart meter installed in their homes. The researchers then randomly draw a value within the delineated range, and if the value equals or exceeds the stated WTA, then the transaction takes place with a 10% probability; that is, if successful the researchers will pay the individual their minimum WTA, and the individual’s name will be added to the waitlist for smart meter installation with their energy supplier. If the number selected is below their WTA, no such transaction takes place. All participants are informed of the design and payout probability prior to consenting to the survey, and again prior to stating their WTA in the survey.
In the main study to follow this pilot, prior to eliciting the WTA, the researchers will experimentally vary information on the delineated range presented to households. By doing so we can quantify the influence prior knowledge on the range has on WTA.
We will estimate the causal effect of our treatment using a tobit regression model to account for the censorship of our outcome variable from below and above.