Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/11513
Appears in Collections:Economics Conference Papers and Proceedings
Authors: Campbell, Danny
Hensher, David A
Scarpa, Riccardo
Contact Email: danny.campbell@stir.ac.uk
Title: Cost thresholds, cut-offs and sensitivities in stated choice analysis: identification and implications
Citation: Campbell D, Hensher DA & Scarpa R Cost thresholds, cut-offs and sensitivities in stated choice analysis: identification and implications In: International Choice Modelling Conference, International Choice Modelling Conference 2011. Second International Choice Modelling Conference, 2011, 4.7.2011 - 6.7.2011, Leeds, UK.
Issue Date: 4-Jul-2011
Conference Name: Second International Choice Modelling Conference, 2011
Conference Dates: 2011-07-04T00:00:00Z
Conference Location: Leeds, UK
Abstract: Within the discrete choice literature, there is growing recognition that some respondents do not process all attributes when evaluating their choice outcomes. Worryingly, the cost attribute is often among those attributes that are likely to be ignored by respondents. We use probabilistic decision process models (similar in form to latent class models, but where we define the classes to describe specific heuristics) to facilitate situations where respondents adopt cost thresholds and cutoffs. We further develop this model to address the potential confounding between preference heterogeneity and processing heterogeneity by simultaneously allowing for a segmentation of respondents based on their sensitivities to cost. Results, based on an empirical dataset on the existence value of rare fish species in Ireland, provide further confirmation that a share of respondents did not attended to cost. Importantly, however, when heterogeneity to cost levels is accounted for the inferred incidence of complete non-attendance is markedly lower, to the extent that when cost thresholds and cut-offs are also accommodated it almost disappears. This modelling approach leads to significant gains in model fit and has important implications for welfare analysis.
Type: Conference Paper
Status: Publisher version (final published refereed version)
Rights: Papers presented at the Conference of Choice Modelling are licensed under a Creative Commons Attribution-Non-Commercial 2.0 UK: England & Wales License (http://creativecommons.org/licenses/by-nc/2.0/uk/).
URI: http://hdl.handle.net/1893/11513
URL: http://www.icmconference.org.uk/index.php/icmc/ICMC2011/schedConf/presentations
Affiliation: Economics
University of Sydney
University of Waikato

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