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Can scale and coefficient heterogeneity be separated in random coefficients models?

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  • Stephane Hess

    ()

  • John Rose

    ()

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    Abstract

    There is growing interest in the notion that a significant component of the heterogeneity retrieved in random coefficients models may actually relate to variations in absolute sensitivities, a phenomenon referred to as scale heterogeneity. As a result, a number of authors have tried to explicitly model such scale heterogeneity, which is shared across coefficients, and separate it from heterogeneity in individual coefficients. This direction of work has in part motivated the development of specialised modelling tools such as the G-MNL model. While not disagreeing with the notion that scale heterogeneity across respondents exists, this paper argues that attempts in the literature to disentangle scale heterogeneity from heterogeneity in individual coefficients in discrete choice models are misguided. In particular, we show how the various model specifications can in fact simply be seen as different parameterisations, and that any gains in fit obtained in random scale models are the result of using more flexible distributions, rather than an ability to capture scale heterogeneity. We illustrate our arguments through an empirical example and show how the conclusions from past work are based on misinterpretations of model results. Copyright Springer Science+Business Media, LLC. 2012

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    Bibliographic Info

    Article provided by Springer in its journal Transportation.

    Volume (Year): 39 (2012)
    Issue (Month): 6 (November)
    Pages: 1225-1239

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    Handle: RePEc:kap:transp:v:39:y:2012:i:6:p:1225-1239

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    Web page: http://www.springerlink.com/link.asp?id=103007

    Related research

    Keywords: Random scale; Discrete choice; Taste heterogeneity; Scale heterogeneity; Mixed logit;

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    9. Caussade, Sebastián & Ortúzar, Juan de Dios & Rizzi, Luis I. & Hensher, David A., 2005. "Assessing the influence of design dimensions on stated choice experiment estimates," Transportation Research Part B: Methodological, Elsevier, vol. 39(7), pages 621-640, August.
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    11. Jordan J. Louviere & Towhidul Islam & Nada Wasi & Deborah Street & Leonie Burgess, 2008. "Designing Discrete Choice Experiments: Do Optimal Designs Come at a Price?," Journal of Consumer Research, University of Chicago Press, vol. 35(2), pages 360-375, 03.
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    Cited by:
    1. Li, Xiaogu & Clark, Christopher D & Jensen, Kimberly L & Yen, Steven T, 2013. "The Effect of Mail-in Utility Rebates on Willingness-to-Pay for ENERGY STAR® Certified Refrigerators," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 159795, Southern Agricultural Economics Association.
    2. Santos, Jair Carvalho Dos, 2006. "Estimativa De Custo De Coleta E Rentabilidade Para Sistema Extrativo De Latex De Seringueira Na Amazonia," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 145689, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    3. Leite, Sheila Cristina Ferreira & De Figueiredo, Margarida Garcia, 2006. "Fluxos De Algodão Em Pluma Para Exportação No Estado Da Bahia: Uma Aplicação De Programação Linear," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 149116, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    4. Thiene, Mara & Meyerhoff, Jürgen & De Salvo, Maria, 2012. "Scale and taste heterogeneity for forest biodiversity: Models of serial nonparticipation and their effects," Journal of Forest Economics, Elsevier, vol. 18(4), pages 355-369.
    5. Rocha, Luiz Eduardo Vasconcelos & Bastos, Patricia De Melo Abrita & Santos, Gilnei Costa, 2006. "Evolução Da Distribuição Da Renda E Da Pobreza Das Famílias Ocupadas E Residentes No Meio Rural Do Estado De Minas Gerais, De 1981 A 2003," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 148649, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    6. ALVES, MARIA ODETE & VALENTE, AIRTON SABOYA Jr, 2006. "Comunicação Rural Entre Três Atores Nas Áreas De Concentração De Fruteiras No Nordeste Brasileiro:," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 148515, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    7. Fifer, Simon & Rose, John & Greaves, Stephen, 2014. "Hypothetical bias in Stated Choice Experiments: Is it a problem? And if so, how do we deal with it?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 164-177.
    8. Massuquetti, Angelica, 2006. "Algumas Reflexões Acerca Do Espaço De Investigação Sobre O," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 149051, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).

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