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Book part
Publication date: 31 January 2015

Andrew T. Collins and David A. Hensher

There is extensive evidence that decision-makers, faced with increasing information load, may simplify their choice by reducing the amount of information to process. One…

Abstract

Purpose

There is extensive evidence that decision-makers, faced with increasing information load, may simplify their choice by reducing the amount of information to process. One simplification, commonly referred to as attribute non-attendance (ANA), is a reduction of the number of attributes of the choice alternatives. Several previous studies have identified relationships between varying information load and ANA using self-reported measures of ANA. This chapter revisits this link, motivated by recognition in the literature that such self-reported measures are vulnerable to reporting error.

Methodology

This chapter employs a recently developed modelling approach that has been shown to effectively infer ANA, the random parameters attribute non-attendance (RPANA) model. The empirical setting systematically varies the information load across respondents, on a number of dimensions.

Findings

Confirming earlier findings, ANA is accentuated by an increase in the number of attribute levels, and a decrease in the number of alternatives. Additionally, specific attributes are more likely to not be attended to as the total number of attributes increases. Willingness to pay (WTP) under inferred ANA differs notably from when ANA is self-reported. Additionally accounting for varying information load, when inferring ANA, has little impact on the WTP distribution of those that do attend. However, due to varying rates of non-attendance, the overall WTP distribution varies to a large extent.

Originality and value

This is the first examination of the impact of varying information load on inferred ANA that is identified with the RPANA model. The value lies in the confirmation of earlier findings despite the evolution of methodologies in the interim.

Details

Bounded Rational Choice Behaviour: Applications in Transport
Type: Book
ISBN: 978-1-78441-071-1

Keywords

Book part
Publication date: 31 January 2015

Soora Rasouli and Harry Timmermans

This chapter reviews models of decision-making and choice under conditions of certainty. It allows readers to position the contribution of the other chapters in this book…

Abstract

Purpose

This chapter reviews models of decision-making and choice under conditions of certainty. It allows readers to position the contribution of the other chapters in this book in the historical development of the topic area.

Theory

Bounded rationality is defined in terms of a strategy to simplify the decision-making process. Based on this definition, different models are reviewed. These models have assumed that individuals simplify the decision-making process by considering a subset of attributes, and/or a subset of choice alternatives and/or by disregarding small differences between attribute differences.

Findings

A body of empirical evidence has accumulated showing that under some circumstances the principle of bounded rationality better explains observed choices than the principle of utility maximization. Differences in predictive performance with utility-maximizing models are however small.

Originality and value

The chapter provides a detailed account of the different models, based on the principle of bounded rationality, that have been suggested over the years in travel behaviour analysis. The potential relevance of these models is articulated, model specifications are discussed and a selection of empirical evidence is presented. Aspects of an agenda of future research are identified.

Details

Bounded Rational Choice Behaviour: Applications in Transport
Type: Book
ISBN: 978-1-78441-071-1

Keywords

Article
Publication date: 24 September 2018

Carola Grebitus and Jutta Roosen

The purpose of this research is to test how varying the numbers of attributes and alternatives affects the use of heuristics and selective information processing in…

Abstract

Purpose

The purpose of this research is to test how varying the numbers of attributes and alternatives affects the use of heuristics and selective information processing in discrete choice experiments (DCEs). The effects of visual attribute and alternative non-attendance (NA) on respondent choices are analyzed.

Design/methodology/approach

Two laboratory experiments that combined eye tracking and DCEs were conducted with 109 and 117 participants in the USA. The DCEs varied in task complexity by the number of product attributes and alternatives.

Findings

Results suggest that participants ignore both single attributes and entire alternatives. Increasing the number of alternatives significantly increased attribute NA. Including NA in choice modeling influenced results more in more complex DCEs.

Research limitations/implications

The current experiments did not test for choice overload. Future studies could investigate more complex designs. The choice environment affects decision-making. Future research could compare laboratory and field experiments.

Practical implications

Private and public sectors often use DCEs to determine consumer preference. Results suggest that DCEs with two alternatives are superior to DCEs with four alternatives because NA was lower in the two-alternative design.

Originality/value

This empirical research examined effects of attribute and alternative NA on choice modeling using eye tracking and DCEs with varying degrees of task complexity. Results suggest that accounting for NA reduces the risk of over- or understating the impact of attributes on choice, in that one avoids claiming significance for attributes that might not truly be preferred, and vice versa.

Details

European Journal of Marketing, vol. 52 no. 9/10
Type: Research Article
ISSN: 0309-0566

Keywords

Open Access
Article
Publication date: 27 August 2020

Dieter Koemle and Xiaohua Yu

This paper reviews the current literature on theoretical and methodological issues in discrete choice experiments, which have been widely used in non-market value…

3861

Abstract

Purpose

This paper reviews the current literature on theoretical and methodological issues in discrete choice experiments, which have been widely used in non-market value analysis, such as elicitation of residents' attitudes toward recreation or biodiversity conservation of forests.

Design/methodology/approach

We review the literature, and attribute the possible biases in choice experiments to theoretical and empirical aspects. Particularly, we introduce regret minimization as an alternative to random utility theory and sheds light on incentive compatibility, status quo, attributes non-attendance, cognitive load, experimental design, survey methods, estimation strategies and other issues.

Findings

The practitioners should pay attention to many issues when carrying out choice experiments in order to avoid possible biases. Many alternatives in theoretical foundations, experimental designs, estimation strategies and even explanations should be taken into account in practice in order to obtain robust results.

Originality/value

The paper summarizes the recent developments in methodological and empirical issues of choice experiments and points out the pitfalls and future directions both theoretically and empirically.

Details

Forestry Economics Review, vol. 2 no. 1
Type: Research Article
ISSN: 2631-3030

Keywords

Book part
Publication date: 15 January 2010

David A. Hensher

It has long been recognised that humans draw from a large pool of processing aids to help manage the everyday challenges of life. It is not uncommon to observe individuals…

Abstract

It has long been recognised that humans draw from a large pool of processing aids to help manage the everyday challenges of life. It is not uncommon to observe individuals adopting simplifying strategies when faced with ever increasing amounts of information to process, and especially for decisions where the chosen outcome will have a very marginal impact on their well-being. The transactions costs associated with processing all new information often exceed the benefits from such a comprehensive review. The accumulating life experiences of individuals are also often brought to bear as reference points to assist in selectively evaluating information placed in front of them. These features of human processing and cognition are not new to the broad literature on judgment and decision-making, where heuristics are offered up as deliberative analytic procedures intentionally designed to simplify choice. What is surprising is the limited recognition of heuristics that individuals use to process the attributes in stated choice experiments. In this paper we present a case for a utility-based framework within which some appealing processing strategies are embedded (without the aid of supplementary self-stated intentions), as well as models conditioned on self-stated intentions represented as single items of process advice, and illustrate the implications on willingness to pay for travel time savings of embedding each heuristic in the choice process. Given the controversy surrounding the reliability of self-stated intentions, we introduce a framework in which mixtures of process advice embedded within a belief function might be used in future empirical studies to condition choice, as a way of increasingly judging the strength of the evidence.

Details

Choice Modelling: The State-of-the-art and The State-of-practice
Type: Book
ISBN: 978-1-84950-773-8

Article
Publication date: 27 July 2018

Zhao Ding and Awudu Abdulai

The purpose of this paper is to examine smallholders’ preferences and willingness to pay for microcredit products with varying attribute combinations, in order to…

Abstract

Purpose

The purpose of this paper is to examine smallholders’ preferences and willingness to pay for microcredit products with varying attribute combinations, in order to contribute to the debate on the optimal design of rural microcredit.

Design/methodology/approach

Data used in this study are based on a discrete choice experiment from 552 randomly selected respondents. Mixed logit and latent class models are estimated to examine the choice probability and sources of preference heterogeneity. Endogenous attribute attendance models are applied to account for attribute non-attendance (ANA) phenomenon, focusing on separate non-attendance probability as well as joint non-attendance probability.

Findings

The results demonstrate that preference heterogeneity and ANA exist in the smallholder farmers’ microcredit choices. Averagely, smallholder farmers prefer longer credit period, smaller credit size, lower transaction costs and lower interest rate. Guarantor collateral method and installment repayment positively affect their preferences as well. Moreover, respondents are found to be willing to pay more for the attributes they consider important. The microcredit providers are able to attract new customers under the current interest rates, if the combination of attributes is appropriately adjusted.

Originality/value

This study contributes to the debate by assessing the preference trade-off of different microcredit attributes more comprehensively than in previous analyses, by taking preference heterogeneity and ANA into account.

Details

China Agricultural Economic Review, vol. 10 no. 3
Type: Research Article
ISSN: 1756-137X

Keywords

Article
Publication date: 29 April 2021

Giuseppe Di Vita, Carla Cavallo, Teresa Del Giudice, Raffaella Pergamo, Gianni Cicia and Mario D'Amico

Recently, several regional protected geographical indications (PGI) have been introduced in Italy for extra virgin olive oil (EVOO) with the aim of coping with the…

Abstract

Purpose

Recently, several regional protected geographical indications (PGI) have been introduced in Italy for extra virgin olive oil (EVOO) with the aim of coping with the substantial failure of protected designations of origin (PDO). This study aims to identify which characteristics consumers expect, in order to anticipate the market success.

Design/methodology/approach

In this study, a survey has been used on a sample of consumers from Sicily, one of the first regions which recently developed a regional PGI for EVOO. Data have been analyzed with a rank-ordered logit model.

Findings

Results yielded that consumers would accept this new product and their expectations correspond to a product with attributes such as: green color, not filtered, not with a sweet taste and with a known brand. A possible target can be represented by young men.

Practical implications

The results obtained anticipate whether this product would be accepted and provides direct indications for producers who wish to enter the market with a PGI EVOO.

Originality/value

This work focuses on consumer behavior toward products that are specifically certified with a recently introduced PGI label, and they still are not so common on the market.

Details

British Food Journal, vol. 123 no. 12
Type: Research Article
ISSN: 0007-070X

Keywords

Book part
Publication date: 30 May 2018

Arne Risa Hole

Patients and health professionals often make decisions which involve a choice between discrete alternatives. This chapter reviews the econometric methods which have been…

Abstract

Patients and health professionals often make decisions which involve a choice between discrete alternatives. This chapter reviews the econometric methods which have been developed for modelling discrete choices and their application in the health economics literature. We start by reviewing the multinomial and mixed logit models and then consider issues such as scale heterogeneity, estimation in willingness to pay space and attribute non-attendance.

Details

Health Econometrics
Type: Book
ISBN: 978-1-78714-541-2

Keywords

Article
Publication date: 13 May 2020

Tchekpo Fortune Ogouvide, Ygue Patrice Adegbola, Roch Cedrique Zossou, Afio Zannou and Gauthier Biaou

This document analyses farmers' preferences and willingness to pay (CAP) for microcredit, in order to facilitate their access in rural areas.

Abstract

Purpose

This document analyses farmers' preferences and willingness to pay (CAP) for microcredit, in order to facilitate their access in rural areas.

Design/methodology/approach

Data are based on a discrete choice experiment with 400 randomly selected farmers from 20 villages of the 7 Benin agricultural development hubs (ADHs). The preference choice modelling was performed using mixed logit (MXL) and latent class logit (LCL) models. Farmers' willingness to pay for each preferred attribute was estimated. The endogenous attribute attendance (EAA) model was also used to capture attribute non-attendance (ANA) phenomenon.

Findings

The results indicate that, on average, farmers prefer individual loans, low interest rates, in kind + cash loans, cash loans, disbursement before planting and loans with at least 10-month duration. These preferences vary according to farmers' classes. Farmers are willing to pay higher or lower interest rates depending on attribute importance. The estimate of the EAA model indicates that, when taking the ANA phenomenon into consideration, people will show stronger attitudes regarding WTP for important factors.

Research limitations/implications

Based on these results from Benin, microfinance institutions (MFIs) in developing countries can, based on the interest rates currently charged, attract more farmers as customers, reviewing the combination of the levels of the attributes associated with the nature of the loan, the type of loan (individual or collective), the disbursement period of funds, the waiting period of the loan and the loan duration. However, the study only considered production credit, ignoring equipment or investment credit.

Practical implications

The document provides information on the key factors that can facilitate producers' access to MFI products and services.

Social implications

Facilitating small farmers' access to financial service will contribute to poverty reduction.

Originality/value

This research contributes to the knowledge of the attributes and attribute levels favoured by farmers when choosing financial products and the amounts they agree to pay for these attributes. The implementation of the results would facilitate small producers' access to financial services; thus contributing to poverty reduction.

Details

Agricultural Finance Review, vol. 80 no. 5
Type: Research Article
ISSN: 0002-1466

Keywords

Content available
Book part
Publication date: 31 January 2015

Abstract

Details

Bounded Rational Choice Behaviour: Applications in Transport
Type: Book
ISBN: 978-1-78441-071-1

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