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The role of the reference alternative in the specification of asymmetric discrete choice models

  • Lorenzo Masiero

    ()

    (Institute for Economic Research (IRE), Faculty of Economics, University of Lugano, Switzerland)

  • John M. Rose

    ()

    (Institute of Transport and Logistics Studies (ITLS), Faculty of Economics and Business, The University of Sydney, Australia)

Within the discrete choice modelling literature, there has been growing interest in including reference alternatives within stated choice survey tasks. Recent studies have investigated asymmetric utility specifications by estimating discrete choice models that include different parameters according to gains and losses relative to the values of the reference attributes. This paper analyses asymmetric discrete choice models by comparing specifications expressed as deviations from the reference point and specifications expressed in absolute values. The results suggest that the selection of the appropriate asymmetric model specification should be based on the type of the stated choice experiment.

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Paper provided by USI Università della Svizzera italiana in its series Quaderni della facoltà di Scienze economiche dell'Università di Lugano with number 1104.

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Length: 14 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:lug:wpaper:1104
Contact details of provider: Web page: https://www.bul.sbu.usi.ch

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  1. Revelt, David & Train, Kenneth, 2000. "Customer-Specific Taste Parameters and Mixed Logit: Households' Choice of Electricity Supplier," Department of Economics, Working Paper Series qt1900p96t, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. Horowitz, John K. & McConnell, Kenneth E., 2002. "A Review of WTA/WTP Studies," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 426-447, November.
  3. Rose, John M. & Bliemer, Michiel C.J. & Hensher, David A. & Collins, Andrew T., 2008. "Designing efficient stated choice experiments in the presence of reference alternatives," Transportation Research Part B: Methodological, Elsevier, vol. 42(4), pages 395-406, May.
  4. Train, Kenneth & Wilson, Wesley W., 2008. "Estimation on stated-preference experiments constructed from revealed-preference choices," Transportation Research Part B: Methodological, Elsevier, vol. 42(3), pages 191-203, March.
  5. Lorenzo Masiero & David A. Hensher, 2010. "Analyzing loss aversion and diminishing sensitivity in a freight transport stated choice experiment," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1004, USI Università della Svizzera italiana.
  6. Hess, Stephane & Rose, John M. & Hensher, David A., 2008. "Asymmetric preference formation in willingness to pay estimates in discrete choice models," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 44(5), pages 847-863, September.
  7. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, March.
  8. Mauricio Sillano & Juan de Dios Ort�zar, 2005. "Willingness-to-pay estimation with mixed logit models: some new evidence," Environment and Planning A, Pion Ltd, London, vol. 37(3), pages 525-550, March.
  9. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  10. Jeff Brazell & Christopher Diener & Ekaterina Karniouchina & William Moore & Válerie Séverin & Pierre-Francois Uldry, 2006. "The no-choice option and dual response choice designs," Marketing Letters, Springer, vol. 17(4), pages 255-268, December.
  11. Hess, Stephane, 2008. "Treatment of reference alternatives in stated choice surveys for air travel choice behaviour," Journal of Air Transport Management, Elsevier, vol. 14(5), pages 275-279.
  12. 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.
  13. De Borger, Bruno & Fosgerau, Mogens, 2008. "The trade-off between money and travel time: A test of the theory of reference-dependent preferences," Journal of Urban Economics, Elsevier, vol. 64(1), pages 101-115, July.
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