Stated Preference Questions: Context and Optimal Response∗

Businesses and governments devote substantial resources to the collection and analysis of survey data concerning the public’s preferences. The possibility of strategic responses to such surveys is analyzed. Consequential and hypothetical surveys are formally defined. For the former the question is posed: what form should strategic behavior take? The particular form is shown to be context dependent. Key features of context such the question response format and the nature of the potential change in the agent’s choice set are examined and several propositions concerning optimal strategic response are derived. In a number of important cases, the strategic response is shown to coincide with truth-telling and, in other instances, valuable information can be extracted from a strategic response if its nature is understood. Hopeless cases are identified. ∗We gratefully acknowledge the support of U.S. Environmental Protection Agency cooperative agreement R-824698 in carrying out the research reported in this paper. The views expressed are those of the authors and not necessarily those of the U.S. Environmental Protection Agency. We also thank Roy Radner for helpful comments.