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Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a latent class approach

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  • McNair, Ben J.
  • Hensher, David A.
  • Bennett, Jeff

Abstract

There is a growing body of evidence in the non-market valuation literature suggesting that responses to a sequence of discrete choice questions tend to violate the assumptions typically made by analysts regarding independence of responses and stability of preferences. Heuristics such as value learning and strategic misrepresentation have been offered as explanations for these results. While a few studies have tested these heuristics as competing hypotheses, none have investigated the possibility that each explains the response behaviour of a subgroup of the population. In this paper, we make a contribution towards addressing this research gap by presenting an equality-constrained latent class model designed to estimate the proportion of respondents employing each of the proposed heuristics. We demonstrate the model on binary and multinomial choice data sources and find three distinct types of response behaviour. The results suggest that accounting for heterogeneity in response behaviour may be a better way forward than attempting to identify a single heuristic to explain the behaviour of all respondents.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23427.

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Date of creation: Jun 2010
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Handle: RePEc:pra:mprapa:23427

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Keywords: Choice experiment; latent class; ordering effects; strategic response; willingness-to-pay;

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References

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  1. Carson, Katherine Silz & Chilton, Susan M. & Hutchinson, W. George, 2009. "Necessary conditions for demand revelation in double referenda," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 219-225, March.
  2. Carlsson, Fredrik & Martinsson, Peter, 2006. "How much is too much? - An investigation of the effect of the number of choice sets, starting point and the choice of bid vectors in choice experiments," Working Papers in Economics 191, University of Gothenburg, Department of Economics.
  3. Riccardo Scarpa & John M. Rose, 2008. "Design efficiency for non-market valuation with choice modelling: how to measure it, what to report and why ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 253-282, 09.
  4. McNair, Ben J. & Bennett, Jeff & Hensher, David A., 2010. "Households’ Willingness to Pay for Undergrounding Electricity and Telecommunications Wires," MPRA Paper 23164, University Library of Munich, Germany.
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  6. McNair, Ben J. & Bennett, Jeff & Hensher, David A., 2011. "A comparison of responses to single and repeated discrete choice questions," Resource and Energy Economics, Elsevier, vol. 33(3), pages 554-571, September.
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  8. Bateman, Ian J. & Burgess, Diane & Hutchinson, W. George & Matthews, David I., 2008. "Learning design contingent valuation (LDCV): NOAA guidelines, preference learning and coherent arbitrariness," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 127-141, March.
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  10. Scarpa, Riccardo & Rose, John M., 2008. "Design efficiency for non-market valuation with choice modelling: how to measure it, what to report and why," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), September.
  11. Herriges, Joseph A. & Shogren, Jason F., 1996. "Starting Point Bias in Dichotomous Choice Valuation with Follow-Up Questioning," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 112-131, January.
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  14. Day, Brett & Pinto Prades, Jose-Luis, 2010. "Ordering anomalies in choice experiments," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 271-285, May.
  15. Kevin J. Boyle & Richard C. Bishop & Michael P. Welsh, 1985. "Starting Point Bias in Contingent Valuation Bidding Games," Land Economics, University of Wisconsin Press, vol. 62(2), pages 188-194.
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  17. Ladenburg, Jacob & Olsen, Søren Bøye, 2008. "Gender-specific starting point bias in choice experiments: Evidence from an empirical study," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 275-285, November.
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