Incentive Compatible Mechanism Design for Discrete Choice Surveys

This paper develops an incentive compatible mechanism for discrete choice questions when the payment is through voluntary contribution. To achieve this we adapt Clark's pivotal condition mechanism to discrete choice questions. We develop a formal proof of the incentive compatibility of the mechanism. We design an induced value experiment to test the incentive compatibility of the mechanism, and compare it's performance with the performances of both open ended voluntary contribution questions and close ended questions, with provision point and money back guarantee assigned to each of them. We find that the discrete choice methods do better than the open ended question in terms of both truth revelation and higher willingness to pay. Although, our incentive compatible discrete choice mechanism performs only marginally better than the close ended PPMBG questions, the theoretical incentive compatibility property provides a motivation for it's use in public good valuation