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Heteroscedastic control for random coefficients and error components in mixed logit

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  • Greene, William H.
  • Hensher, David A.

Abstract

Developments in simulation methods, and the computational power that is now available, have enabled open-form discrete choice models such as mixed logit to be estimated with relative ease. The random parameter (RP) form has been used to identify preference heterogeneity, which can be mapped to specific individuals through re-parameterisation of the mean and/or variance of each RP's distribution. However this formulation depends on the selection of random parameters to reveal such heterogeneity, with any residual heterogeneity forced into the constant variance condition of the extreme value type 1 distribution of the classical multinomial logit model. In this paper we enhance the mixed logit model to capture additional alternative-specific unobserved variation not subject to the constant variance condition, which is independent of sources revealed through random parameters. An empirical example is presented to illustrate the additional information obtained from this model.

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Bibliographic Info

Article provided by Elsevier in its journal Transportation Research Part E: Logistics and Transportation Review.

Volume (Year): 43 (2007)
Issue (Month): 5 (September)
Pages: 610-623

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Handle: RePEc:eee:transe:v:43:y:2007:i:5:p:610-623

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Related research

Keywords: Mixed logit Error components Discrete choice Elasticities Value of time savings;

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  1. Abildtrup, Jens & Garcia, Serge & Olsen, Soren Boye & Stenger, Anne, 2011. "Spatial Preference Heterogeneity in Forest Recreation," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 120386, European Association of Agricultural Economists.
  2. Marit Kragt, 2013. "The Effects of Changing Cost Vectors on Choices and Scale Heterogeneity," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 54(2), pages 201-221, February.
  3. Søren Olsen & Thomas Lundhede & Jette Jacobsen & Bo Thorsen, 2011. "Tough and Easy Choices: Testing the Influence of Utility Difference on Stated Certainty-in-Choice in Choice Experiments," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(4), pages 491-510, August.
  4. David Hensher & John Rose, 2009. "Toll product preferences and implications for alternative payment options and going cashless," Transportation, Springer, vol. 36(2), pages 131-145, March.
  5. Gillespie, Robert & Bennett, Jeffrey W., 2011. "Willingness to pay for kerbside recycling the Brisbane Region," Research Reports 107805, Australian National University, Environmental Economics Research Hub.
  6. Devarasetty, Prem Chand & Burris, Mark & Douglass Shaw, W., 2012. "The value of travel time and reliability-evidence from a stated preference survey and actual usage," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1227-1240.
  7. Hensher, David A., 2010. "Hypothetical bias, choice experiments and willingness to pay," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 735-752, July.
  8. Rabotyagov, Sergey S. & Lin, Sonja, 2013. "Small forest landowner preferences for working forest conservation contract attributes: A case of Washington State, USA," Journal of Forest Economics, Elsevier, vol. 19(3), pages 307-330.
  9. Broch, Stine Wamberg & Strange, Niels & Jacobsen, Jette B. & Wilson, Kerrie A., 2013. "Farmers' willingness to provide ecosystem services and effects of their spatial distribution," Ecological Economics, Elsevier, vol. 92(C), pages 78-86.
  10. Marit E Kragt & Jeff Bennett, 2009. "Using Choice Experiments to value River and Estuary Health in Tasmania with Individual Preference Heterogeneity," Environmental Economics Research Hub Research Reports 0916, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University, revised Sep 2009.
  11. Marit Kragt & Jeffrey Bennett, 2012. "Attribute Framing in Choice Experiments: How Do Attribute Level Descriptions Affect Value Estimates?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(1), pages 43-59, January.
  12. Li, Zheng & Hensher, David A. & Rose, John M., 2013. "Accommodating perceptual conditioning in the valuation of expected travel time savings for cars and public transport," Research in Transportation Economics, Elsevier, vol. 39(1), pages 270-276.
  13. Liesivaara, Petri & Myyrä, Sami, 2014. "Government policies in changing climate and the demand for crop insurance," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170520, Agricultural Economics Society.
  14. Edoardo Marcucci & Valerio Gatta, 2011. "Dissecting Preference Heterogeneity In Consumer Stated Choices," Working Papers 0311, CREI Università degli Studi Roma Tre, revised 2011.
  15. Morten Mørkbak & Jonas Nordström, 2009. "The Impact of Information on Consumer Preferences for Different Animal Food Production Methods," Journal of Consumer Policy, Springer, vol. 32(4), pages 313-331, December.
  16. Jacobsen, Jette Bredahl & Thorsen, Bo Jellesmark, 2010. "Preferences for site and environmental functions when selecting forthcoming national parks," Ecological Economics, Elsevier, vol. 69(7), pages 1532-1544, May.
  17. Stine Broch & Suzanne Vedel, 2012. "Using Choice Experiments to Investigate the Policy Relevance of Heterogeneity in Farmer Agri-Environmental Contract Preferences," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(4), pages 561-581, April.
  18. Mohammed Alemu & Morten Mørkbak & Søren Olsen & Carsten Jensen, 2013. "Attending to the Reasons for Attribute Non-attendance in Choice Experiments," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 54(3), pages 333-359, March.
  19. Czajkowski, Mikołaj & Bartczak, Anna & Giergiczny, Marek & Navrud, Stale & Żylicz, Tomasz, 2014. "Providing preference-based support for forest ecosystem service management," Forest Policy and Economics, Elsevier, vol. 39(C), pages 1-12.

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