STRATEGIC BIAS

Causes survey results to differ from actual willingness to pay because individual have an incentive to not reveal the truth because they can secure a benefit in excess of the costs they have to pay. This arises from the free rider problem. For example, if individuals are told that a service will be provided if the total sum they are willing to pay exceeds the cost of provision and that each will be charged a price according to their maximum willingness to pay then individuals will have an incentive to understate his or her demand.