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Incorporating Discontinuous Preferences into the Analysis of Discrete Choice Experiments

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Author Info
Danny Campbell () (Queen’s University Belfast)
W. George Hutchinson () (Queen’s University Belfast)
Riccardo Scarpa () (University of Waikato)

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Abstract

: Data from a discrete choice experiment on improvements of rural landscape attributes are used to investigate the implications of discontinuous preferences on willingness to pay estimates. Using a multinomial error component logit model, we explore differences in scale and unexplained variance between respondents with discontinuous and continuous preferences and condition taste intensities on whether or not each attribute was considered by the respondent during the evaluation of alternatives. Results suggest that significant improvements in model performance can be achieved when discontinuous preferences are accommodated in the econometric specification, and that the magnitude and robustness of the willingness to pay estimates are sensitive to discontinuous preferences.

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File URL: ftp://mngt.waikato.ac.nz/RePEc/wai/econwp/0718.pdf
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Publisher Info
Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 07/18.

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Length: 19 pages
Date of creation: 20 Sep 2007
Date of revision:
Handle: RePEc:wai:econwp:07/18

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Related research
Keywords: discontinuous preferences; heteroskedastic mixed logit; discrete choice experiments; multinomial error component logit model; rural landscape; willingness to pay;

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Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. R.K. Blamey & J.W. Bennett & J.J. Louviere & M.D. Morrison & J.C. Rolfe, 2002. "Attribute Causality in Environmental Choice Modelling," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(2), pages 167-186, October. [Downloadable!] (restricted)
  2. Luce, Mary Frances & Payne, John W. & Bettman, James R., 2000. "Coping with Unfavorable Attribute Values in Choice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 81(2), pages 274-299, March. [Downloadable!] (restricted)
  3. Danny Campbell & W. George Hutchinson & Riccardo Scarpa, 2007. "Using Choice Experiments to Explore the Spatial Distribution of Willingness to Pay for Rural Landscape Improvements," Working Papers in Economics 07/06, University of Waikato, Department of Economics. [Downloadable!]
    Other versions:
  4. Spash, Clive L. & Hanley, Nick, 1995. "Preferences, information and biodiversity preservation," Ecological Economics, Elsevier, vol. 12(3), pages 191-208, March. [Downloadable!] (restricted)
    Other versions:
  5. Spash, Clive L., 2000. "Ecosystems, contingent valuation and ethics: the case of wetland re-creation," Ecological Economics, Elsevier, vol. 34(2), pages 195-215, August. [Downloadable!] (restricted)
  6. Gowdy, John M. & Mayumi, Kozo, 2001. "Reformulating the foundations of consumer choice theory and environmental valuation," Ecological Economics, Elsevier, vol. 39(2), pages 223-237, November. [Downloadable!] (restricted)
  7. Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August. [Downloadable!] (restricted)
  8. Saelensminde, Kjartan, 2006. "Causes and consequences of lexicographic choices in stated choice studies," Ecological Economics, Elsevier, vol. 59(3), pages 331-340, September. [Downloadable!] (restricted)
  9. Danny Campbell & W. George Hutchinson & Riccardo Scarpa, 2006. "Using Discrete Choice Experiments to Derive Individual-Specific WTP Estimates for Landscape Improvements under Agri-Environmental Schemes: Evidence from the Rural Environment Protection Scheme in Irel," Working Papers 2006.26, Fondazione Eni Enrico Mattei. [Downloadable!]
  10. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132. [Downloadable!] (restricted)
  11. Kjartan Sælensminde, 2002. "The Impact of Choice Inconsistencies in Stated Choice Studies," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(4), pages 403-420, December. [Downloadable!] (restricted)
  12. Lockwood, Michael, 1996. "Non-Compensatory Preference Structures In Non-Market Valuation Of Natural Area Policy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(02), August. [Downloadable!]
  13. William S. Breffle & Robert D. Rowe, 2002. "Comparing Choice Question Formats for Evaluating Natural Resource Tradeoffs," Land Economics, University of Wisconsin Press, vol. 78(2), pages 298-314. [Downloadable!] (restricted)
  14. Mika Rekola, 2003. "Lexicographic Preferences in Contingent Valuation: A Theoretical Framework with Illustrations," Land Economics, University of Wisconsin Press, vol. 79(2), pages 277-291. [Downloadable!] (restricted)
  15. Robert Sugden, 2005. "Anomalies and Stated Preference Techniques: A Framework for a Discussion of Coping Strategies," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(1), pages 1-12, 09. [Downloadable!] (restricted)
  16. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-95, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kragt, Marit E. & Bennett, J.W., 2009. "Using choice experiments to value river and estuary health in Tasmania with individual preference heterogeneity," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48058, Australian Agricultural and Resource Economics Society. [Downloadable!]
    Other versions:
  2. Marit E Kragt & Jeff Bennett, . "What’s appropriate? Investigating the Effects of Attribute Level Framing and Changing Cost Levels in Choice Experiments," Environmental Economics Research Hub Research Reports 0917, Environmental Economics Research Hub, Crawford School, Australian National University. [Downloadable!]
  3. Stephane Hess & John Rose, 2009. "Should Reference Alternatives in Pivot Design SC Surveys be Treated Differently?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(3), pages 297-317, March. [Downloadable!] (restricted)
  4. Danny Campbell & Riccardo Scarpa & W. Hutchinson, 2008. "Assessing the spatial dependence of welfare estimates obtained from discrete choice experiments," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 1(2), pages 117-126, December. [Downloadable!] (restricted)
    Other versions:
  5. Pluske, Jo & Burton, Michael & Rigby, Dan & Vercoe, Phil, 2009. "Cattle breeding in Northern Australia: Revealing how consumers react to new technologies," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48167, Australian Agricultural and Resource Economics Society. [Downloadable!]
  6. Marit Kragt & Jeff Bennett, 2008. "Designing Choice Experiments to Test for Anchoring and Framing Effects," Environmental Economics Research Hub Research Reports 0810, Environmental Economics Research Hub, Crawford School, Australian National University. [Downloadable!]
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