Lexicographic preferences for rural environmental landscape improvements: implications on individual-specific willingness to pay estimates
AbstractIn discrete choice experiments respondents are generally assumed to consider all of the attributes across each of the alternatives, and to choose their most preferred. However, results in this paper indicate that for many respondents employ simplified lexicographic decisionmaking rules, whereby they have a ranking of the attributes, but their choice of an alternative is based solely on the level of their most important attribute(s). Not accounting for these simple decision-making heuristics introduces systemic errors and leads to biased point estimates, as they are a violation of the continuity axiom and a departure from the use of compensatory decision-making. In this paper the implications of lexicographic preferences is studied for a number of rural environmental landscape improvement measures. Differently from previous analysis, this paper uses a mixed logit specification and focuses on the sensitivity of individual-specific willingness to pay estimates conditional on whether lexicographic decision-making rules are accounted for in the modelling of discrete choice responses.
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Bibliographic InfoPaper provided by Rural Economy and Development Programme,Teagasc in its series Working Papers with number 0610.
Length: 33 pages
Date of creation: 2006
Date of revision:
Other versions of this item:
- Danny Campbell & W. George Hutchinson & Riccardo Scarpa, 2006. "Lexicographic Preferences in Discrete Choice Experiments: Consequences on Individual-Specific Willingness to Pay Estimates," Working Papers 2006.128, Fondazione Eni Enrico Mattei.
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
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