Revealing the extent of process heterogeneity in choice analysis: An empirical assessment
Choice analysts increasingly use a mix of revealed preference and stated choice data paradigms to identify preferences of samples of individuals that are used to infer behavioural response and willingness to pay for specific attributes. These data are in a sense artificial constructs that are developed to approximate real choice settings of the way that individuals process relevant information in making choices. As such, all data designs formalized through a survey instrument seek information through questions that become descriptions of events and as such the probabilities of choice that are of interest are strictly probabilities attached to event descriptions and not choice probabilities of events per se. The recognition of this distinction, initially noted by Kahneman et al. [Kahneman, D., Slovic, P., Tversky, A., 1982. Judgement under uncertainty: Heuristics and biases. Cambridge University Press, New York], can be captured, at least in part, through the idea of process heterogeneity, as a way of recognizing and accounting for the many ways in which individuals process information, and in part is influenced by the way the analyst describes the context in which preference data is sought. Building on previous contributions on attribute processing, this paper draws on recent empirical evidence to further reinforce the importance of joint modelling of process and outcome in choice analysis. This study adds to the evidence of a trend emerging on the upward bias of mean estimates of marginal willingness to pay when ignoring process heterogeneity.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 43 (2009)
Issue (Month): 2 (February)
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional|
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.:
- Matthew Rabin, 1998.
"Psychology and Economics,"
Journal of Economic Literature,
American Economic Association, vol. 36(1), pages 11-46, March.
- Matthew Rabin., 1997. "Psychology and Economics," Economics Working Papers 97-251, University of California at Berkeley.
- Rabin, Matthew, 1997. "Psychology and Economics," Department of Economics, Working Paper Series qt8jd5z5j2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
- Kenneth Train, 2003.
"Discrete Choice Methods with Simulation,"
Online economics textbooks,
SUNY-Oswego, Department of Economics, number emetr2, December.
- David A. Hensher, 2008. "Joint Estimation of Process and Outcome in Choice Experiments and Implications for Willingness to Pay," Journal of Transport Economics and Policy, University of Bath, vol. 42(2), pages 297-322, May.
When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:43:y:2009:i:2:p:117-126. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.