Lexicographic / discontinuous choices

Lexicographic choices  Respondents base their choice on a subset of the presented attributes  Continuity axiom is violated = no trade-off between the attributes  Biased welfare estimates

Sources  Choice heuristics(choice set complexity)  Protest responses (paying for env, pay vehicle)  Design issues (causal att, levels)  True preferences

Some empirical work  Hensher, Rose and Greene, 2005  Campbell, Hutchinson and Scarpa, 2007  Carlsson, Kataria and Lampi, 2008

Hensher et al. (2005) “The implications on willingness to pay of respondents ignoring specific attributes”  Study = car commuters in Sydney  Model = Mixed logit model with individual specific coefficients  Coefficients are restricted to zero if the respondent ignored that attribute  Results = restricted model leads to 18-62% higher value of time

Campbell et al. (2007) “Incorporating Discontinuous Preferences into the Analysis of Discrete Choice Experiments”  Study = rural environmental landscapes in Ireland  Model = ECM allowing for differences in scale and error variance between subsets of respondents.  Also weighting of attributes  Findings: Error variance in discontinuous subset is significantly higher Scaling and weighting leads to lower WTP estimates

Carlsson et al. (2008) “Ignoring attributes in choice experiments”  Study = three environmental objectives in Sweden  Model = RPL with parameters restricted to 0 if ignored  Three assumptions in estimating WTP: All respondents positive WTP Ignoring env attribute zero WTP Ignoring costs and env attribute zero WTP  Findings: No systematic differences between restr and unrestr model Only significant differences in WTP if assumed that ignoring attribute means zero WTP

CM challenges  Survey design? Complexity Follow-up questions  Reasons for choice behaviour? Choice heuristics True zero WTP  Analysis? Econometric models Respondents who ignore cost attribute