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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

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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  • 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.
  • Handle: RePEc:tpe:jtecpo:v:42:y:2008:i:2:p:297-322
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    Cited by:

    1. Windle, Jill & Rolfe, John, 2010. "Restricted versus unrestricted choice in labelled choice experiments: exploring the tradeoffs of expanding choice dimensions," Research Reports 95072, Australian National University, Environmental Economics Research Hub.
    2. Rolfe, John & Windle, Jill, 2010. "Valuing environmental improvements in the Great Barrier Reef: Ecological and preference heterogeneity in local area case studies," Research Reports 95052, Australian National University, Environmental Economics Research Hub.
    3. Arora, Anchal & Bansal, Sangeeta & Ward, Patrick S., 2015. "Eliciting farmers’ valuation for abiotic stress-tolerant rice in India:," IFPRI discussion papers 1409, International Food Policy Research Institute (IFPRI).
    4. 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.
    5. Hole, Arne Risa & Kolstad, Julie Riise & Gyrd-Hansen, Dorte, 2013. "Inferred vs. stated attribute non-attendance in choice experiments: A study of doctors’ prescription behaviour," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 21-31.
    6. 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.
    7. 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.
    8. 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.
    9. Richard Yao & Riccardo Scarpa & John Rose & James Turner, 2015. "Experimental Design Criteria and Their Behavioural Efficiency: An Evaluation in the Field," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(3), pages 433-455, November.
    10. Carlsson, Fredrik & Kataria, Mitesh & Lampi, Elina & Löfgren, Åsa & Sterner, Thomas, 2011. "Is fairness blind?--The effect of framing on preferences for effort-sharing rules," Ecological Economics, Elsevier, vol. 70(8), pages 1529-1535, June.
    11. Hoyos Ramos, David, 2010. "Using discrete choice experiments for environmental valuation," BILTOKI 2010-03, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    12. 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.
    13. Rolfe, John & Windle, Jill, 2012. "Testing benefit transfer of reef protection values between local case studies: The Great Barrier Reef in Australia," Ecological Economics, Elsevier, vol. 81(C), pages 60-69.
    14. Caputo, Vincenzina & Loo, Ellen J. Van & Scarpa, Riccardo & Nayga, Rodolfo M. Jr & Verbeke, Wim, 2014. "“Using Experiments to Address Attribute Non-attendance in Consumer Food Choices”," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 177173, Agricultural and Applied Economics Association.
    15. 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.
    16. Fischer, Anke & Glenk, Klaus, 2011. "One model fits all? -- On the moderating role of emotional engagement and confusion in the elicitation of preferences for climate change adaptation policies," Ecological Economics, Elsevier, vol. 70(6), pages 1178-1188, April.
    17. 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.
    18. 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.
    19. David Hensher, 2014. "Attribute processing as a behavioural strategy in choice making," Chapters,in: Handbook of Choice Modelling, chapter 12, pages 268-289 Edward Elgar Publishing.
    20. Hoyos Ramos, David & Mariel Chladkova, Petr & Meyerhoff, Jürgen, 2010. "Comparing the performance of different approaches to deal with attribute non-attendance in discrete choice experiments: a simulation experiment," BILTOKI 2010-01, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    21. 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.

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