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Toward more general hedonic estimation: Clarifying the roles of alternative experimental designs with an application to a housing attribute

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  • Eriksen, Michael D.
  • Kniesner, Thomas J.
  • Rohlfs, Chris
  • Sullivan, Ryan

Abstract

Traditional hedonic estimation approaches are known to be biased when exogenous shocks affect multiple product attributes, the market for the product's complements and substitutes, and aggregate quantity produced. Our research develops a more general hedonic model to recover the marginal willingness to pay for an attribute in the presence of such known hazards to identification based on randomized experiments. Three experimental approaches are introduced on how to estimate attribute demand that address known biases, have transparent identification assumptions, and are feasible to implement. We apply one of the estimators developed to measure the marginal value placed by householders on subsidized carbon monoxide detectors.

Suggested Citation

  • Eriksen, Michael D. & Kniesner, Thomas J. & Rohlfs, Chris & Sullivan, Ryan, 2016. "Toward more general hedonic estimation: Clarifying the roles of alternative experimental designs with an application to a housing attribute," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 54-62.
    • Handle: RePEc:eee:regeco:v:57:y:2016:i:c:p:54-62
    DOI: 10.1016/j.regsciurbeco.2016.01.001
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    More about this item

    Keywords

    Hedonic; Identification; Field experiment; Marginal willingness to pay; Heterogeneous goods; Endogenous attributes;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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