Alternative Models of Preference Heterogeneity for Elicited Choice Probabilities

Arbeitspapier

Discrete choice experiments (DCEs) often present concise choice scenarios that may appear incomplete to respondents. To allow respondents to express uncertainty arising from this incompleteness, DCEs may ask them to state probabilities with which they expect to make specific choices. The workhorse method for analyzing the elicited probabilities involves semi-parametric estimation of population average preferences. Despite flexible distributional assumptions, this method presents challenges in estimating unobserved preference heterogeneity, a key element in non-market valuation studies. We introduce a fractional response model based on a mixture of beta distributions. The model enables researchers to uncover preference heterogeneity under comparable parametric assumptions as adopted in conventional choice analysis, and can accommodate multiplicative forms of heterogeneity that make the semi-parametric method inconsistent. Using a DCE on alternative fuel vehicles, we illustrate the complementary roles of the parametric and semi-parametric approaches. We also undertake a separate analysis in which respondents are randomized to either a DCE employing a conventional choice elicitation format or a parallel DCE employing the probability elicitation format.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16821

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions ; Consumer Economics: Empirical Analysis ; Expectations; Speculations ; Alternative Energy Sources ; Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
• Subject: discrete choice experiment ; probability elicitation ; mixed logit ; beta regression ; willingness to pay

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kettlewell, Nathan ; Walker, Matthew J. ; Yoo, Hong Il
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2024

Further information

• Last update: 10.03.2025, 11:44 AM CET