We utilize the Becker-Degroot-Marschak (1964) mechanism to estimate the willingness to pay for clean drinking water technology in northern Ghana. Under certain conditions, the BDM mechanism has attractive properties for empirical research, allowing us to directly estimate demand, compute heterogeneous treatment effects, and study the direct and screening effect of prices with minor modifications to a standard field experiment setting. We demonstrate the implementation of BDM along these three dimensions, compare it to the standard take-it-or-leave it method for eliciting willingness-to-pay, and discuss practical issues for implementing the mechanism in true field settings.
Berry, J.; Fischer, G.; Guiteras, R. Eliciting and Utilizing Willingness to Pay: Evidence from Field Trials in Northern Ghana. International Growth Centre (IGC), London, UK (2012) 44 pp. [IGC Working Paper 12/0188]
Eliciting and Utilizing Willingness to Pay: Evidence from Field Trials in Northern Ghana