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Joint Estimation of Process and Outcome in Choice Experiments and Implications for Willingness to Pay

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  • David A. Hensher
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    Abstract

    There is a growing recognition that the study of discrete choice outcomes should take into account the process rules that are used to establish eligibility of each attribute. This paper proposes a joint process-outcome model in which the choices made are conditioned on the rules adopted by each respondent in assessing the attributes packaged in the definition of each alternative. We set out a joint model and estimate two sets of panel-based mixed logit models - one set in which we ignore the attribute processing rules and one set in which we explicitly account for the rules. Using data from a commuter car trip study of unlabelled packages of times and cost attributes, we identify willingness to pay distributions for travel time savings under the various process rules. The main finding is that failing to account for the process rules tends to result in statistically higher mean estimates of values of travel time savings. © 2008 LSE and the University of Bath

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    Bibliographic Info

    Article provided by London School of Economics and University of Bath in its journal Journal of Transport Economics and Policy.

    Volume (Year): 42 (2008)
    Issue (Month): 2 (May)
    Pages: 297-322

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    Handle: RePEc:tpe:jtecpo:v:42:y:2008:i:2:p:297-322

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    Web page: http://www.bath.ac.uk/e-journals/jtep

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    Cited by:
    1. Carlsson,, Fredrik & Kataria, Mitesh & Lampi, Elina & Löfgren, Åsa & Sterner, Thomas, 2010. "Is Fairness Blind? - The effect of framing on preferences for effort-sharing rules," Working Papers in Economics 437, University of Gothenburg, Department of Economics.
    2. Bliemer, Michiel C.J. & Rose, John M., 2011. "Experimental design influences on stated choice outputs: An empirical study in air travel choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(1), pages 63-79, January.
    3. Stephane Hess & David Hensher, 2013. "Making use of respondent reported processing information to understand attribute importance: a latent variable scaling approach," Transportation, Springer, vol. 40(2), pages 397-412, February.
    4. 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.
    5. David Hensher & David Layton, 2010. "Parameter transfer of common-metric attributes in choice analysis: implications for willingness to pay," Transportation, Springer, vol. 37(3), pages 473-490, May.
    6. Arne Risa Hole & Julie Riise Kolstad & Dorte Gyrd-Hansen, 2012. "Inferred vs Stated Attribute Non-Attendance in Choice Experiments: A Study of Doctors' Prescription Behaviour," Working Papers 2012010, The University of Sheffield, Department of Economics.
    7. 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.
    8. Puckett, Sean M. & Hensher, David A., 2009. "Revealing the extent of process heterogeneity in choice analysis: An empirical assessment," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(2), pages 117-126, February.
    9. Hoyos, David, 2010. "The state of the art of environmental valuation with discrete choice experiments," Ecological Economics, Elsevier, vol. 69(8), pages 1595-1603, June.
    10. John M. Rose & Lorenzo Masiero, 2010. "A comparison of prospect theory in WTP and preference space," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1006, USI Università della Svizzera italiana.
    11. David Hensher & John Rose & William Greene, 2012. "Inferring attribute non-attendance from stated choice data: implications for willingness to pay estimates and a warning for stated choice experiment design," Transportation, Springer, vol. 39(2), pages 235-245, March.
    12. Hess, Stephane & Hensher, David A., 2010. "Using conditioning on observed choices to retrieve individual-specific attribute processing strategies," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 781-790, July.

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