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Book part
Publication date: 3 June 2008

Nathaniel T. Wilcox

Choice under risk has a large stochastic (unpredictable) component. This chapter examines five stochastic models for binary discrete choice under risk and how they combine…

Abstract

Choice under risk has a large stochastic (unpredictable) component. This chapter examines five stochastic models for binary discrete choice under risk and how they combine with “structural” theories of choice under risk. Stochastic models are substantive theoretical hypotheses that are frequently testable in and of themselves, and also identifying restrictions for hypothesis tests, estimation and prediction. Econometric comparisons suggest that for the purpose of prediction (as opposed to explanation), choices of stochastic models may be far more consequential than choices of structures such as expected utility or rank-dependent utility.

Details

Risk Aversion in Experiments
Type: Book
ISBN: 978-1-84950-547-5

Book part
Publication date: 15 January 2010

Matthieu de Lapparent

This article addresses simultaneously two important features in random utility maximisation (RUM) choice modelling: choice set generation and unobserved taste…

Abstract

This article addresses simultaneously two important features in random utility maximisation (RUM) choice modelling: choice set generation and unobserved taste heterogeneity. It is proposed to develop and to compare definitions and properties of econometric specifications that are based on mixed logit (MXL) and latent class logit (LCL) RUM models in the additional presence of prior compensatory screening decision rules. The latter allow for continuous latent bounds that determine choice alternatives to be or not to be considered for decision making. It is also proposed to evaluate and to test each against the other ones in an application to home-to-work mode choice in the Paris region of France using 2002 data.

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

Book part
Publication date: 1 August 2004

Harry P. Bowen and Margarethe F. Wiersema

Research on strategic choices available to the firm are often modeled as a limited number of possible decision outcomes and leads to a discrete limited dependent variable…

Abstract

Research on strategic choices available to the firm are often modeled as a limited number of possible decision outcomes and leads to a discrete limited dependent variable. A limited dependent variable can also arise when values of a continuous dependent variable are partially or wholly unobserved. This chapter discusses the methodological issues associated with such phenomena and the appropriate statistical methods developed to allow for consistent and efficient estimation of models that involve a limited dependent variable. The chapter also provides a road map for selecting the appropriate statistical technique and it offers guidelines for consistent interpretation and reporting of the statistical results.

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Research Methodology in Strategy and Management
Type: Book
ISBN: 978-1-84950-235-1

Article
Publication date: 31 July 2008

Nusser Raajpoot, Rubina Javed and Khoon Koh

The purpose of this paper is to introduce the concept of robust design in retail service literature.

Abstract

Purpose

The purpose of this paper is to introduce the concept of robust design in retail service literature.

Design/methodology/approach

Using a Taguchi design comprising of inner L8 (27) and outer 22 arrays, a discrete choice task was designed for 233 students respond to. Signal‐to‐noise (S/N) ratio was used to test design robustness.

Findings

Negative effects of uncontrollable design factors on service choice were minimized through the use of inner and outer Taguchi arrays. The single composite measure of consumer choice called S/N ratio accounted both for mean and variance of choice probabilities.

Research limitations/implications

Use of student sample was a major limitation. Also, the interaction between design factors was not tested as it required the use of more complicated designs.

Practical implications

This method can be used to improve design robustness by minimizing the impact of uncontrollable noise factors. Use of S/N ratio can help to select the design that simultaneously maximized the choice probabilities and minimized performance variation.

Originality/value

The paper makes important methodological and operational contributions to the retail service design literature. First, the concept of controllable and uncontrollable factors in choice‐based designs is introduced. Second, the use of S/N ratio as a single, composite measure of design robustness was incorporated. Operationally, this study highlights the impact of less‐studied concepts of wayfinding and customer incompatibility on satisfaction of retail customers.

Details

International Journal of Commerce and Management, vol. 18 no. 2
Type: Research Article
ISSN: 1056-9219

Keywords

Article
Publication date: 19 January 2021

Masaood Moahid, Ghulam Dastgir Khan, Yuichiro Yoshida, Keshav Lall Maharjan and Imran Khan Wafa

This research measures the causal effects of pertinent agricultural credit policy attributes on farmers' participation probability and their willingness to pay (WTP) for…

Abstract

Purpose

This research measures the causal effects of pertinent agricultural credit policy attributes on farmers' participation probability and their willingness to pay (WTP) for agricultural credit and its associated services.

Design/methodology/approach

A randomized conjoint field experiment is conducted in three districts of Nangarhar Province, Afghanistan, capturing stated-preference data of 300 farmers. Each survey participant was provided with two hypothetical choices and one opt-out option to generate rankings based on their preferences. The levels of six attributes—namely, the credit service provider's location, the time required to obtain credit, the frequency of installments, the type of loan security, the provider of the credit services and the annual membership fee to participate in the proposed policy—are randomly assigned to produce the alternative choices.

Findings

The results reveal that farmers support the suggested agricultural credit services policy (ACSP), and the lower bound of their WTP for participation in the policy is as high as 5% of their average annual income.

Practical implications

This study provides evidence-based policy input for designing effective agricultural credit policies in Afghanistan, which can be extended to other countries with a similar context.

Originality/value

This is the first study estimating the causal effects of formal agricultural credit policy attributes on farmers' participation probability. Further, this study nonparametrically measures farmers' WTP for participation in the proposed policy.

Details

Agricultural Finance Review, vol. 81 no. 4
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 1 April 2006

Steven B. Caudill, Carl D. Hudson, Beverly B. Marshall and Anastasia Roumantzi

This paper aims to extend the work by Vafeas and Lie and Lie by developing an empirical model of choice among four alternative mechanisms for distributing cash from…

Abstract

Purpose

This paper aims to extend the work by Vafeas and Lie and Lie by developing an empirical model of choice among four alternative mechanisms for distributing cash from corporations to shareholders: a fixed‐price self‐tender offer, a Dutch auction self‐tender offer, an open market share repurchase, and a special dividend.

Design/methodology/approach

A multinomial logit (MNL) model adapted for choice‐based sampling is used to examine the factors that influence a firm's choice among the four methods.

Findings

Firms with a high degree of heterogeneity in shareholder valuations tend to select an open market repurchase, while firms with low levels of heterogeneity choose a special dividend. Firms already paying high dividends are more likely to issue a special dividend than institute an open market repurchase. A firm with poor stock performance prior to the announcement is more likely to choose a fixed‐price self‐tender offer or open market share repurchase. On the other hand, firms are more likely to follow strong performance with a special dividend. Contrary to Persons' model, it is found that firms facing a takeover threat are more likely to choose a fixed‐price tender offer than a Dutch auction.

Practical implications

It is shown that the ownership structure, current payout level; the size of the distribution, and the degree of stock undervaluation are among the most important determinants of a firm's choice among alternative payout methods.

Originality/value

This study adds to the existing literature by developing the first empirical model of choice among all four one‐time (or infrequent) corporate cash disbursement methods. It is also the first to adjust the MNL estimates for the choice‐based sampling method used to collect the data.

Details

Studies in Economics and Finance, vol. 23 no. 1
Type: Research Article
ISSN: 1086-7376

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

Abstract

Details

Transportation and Traffic Theory in the 21st Century
Type: Book
ISBN: 978-0-080-43926-6

Abstract

Details

Handbook of Transport Modelling
Type: Book
ISBN: 978-0-08-045376-7

Article
Publication date: 4 November 2014

Subhro Mitra and Steven M. Leon

– The purpose of this paper is to develop a better understanding of the factors that influence a shipper's decision to choose air cargo as a mode of shipment.

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Abstract

Purpose

The purpose of this paper is to develop a better understanding of the factors that influence a shipper's decision to choose air cargo as a mode of shipment.

Design/methodology/approach

A disaggregate multinomial discrete choice model is developed using freight shipment survey data to identify critical factors influencing air cargo mode choice. Disaggregate revealed preference data is obtained from surveying 347 manufacturers, freight forwarders, and other third-party service providers.

Findings

The empirical model developed in this research shows that the rate of shipment, time of transit, cost-per-pound shipped, quantity shipped, perishability and delay rate of the mode are significant factors that influence mode choice.

Research limitations/implications

The discrete choice model developed can be improved by taking into account logistics costs not considered in this research. Perhaps more in-depth surveys of the shippers and freight forwarders are needed. Additionally, improving the mode choice model by including stated preference data and subsequently incorporating service quality latent variables would be beneficial.

Practical implications

Identifying the sensitivity of the shippers to various factors influencing mode selection enables transportation planners make better demand forecast for each mode of transportation.

Originality/value

This paper extends previous mode choice studies by analyzing mode selection between air cargo and other modes. Better forecasting is achieved by replacing the logit model with probit, heteroscedastic extreme value and mixed logit models.

Details

The International Journal of Logistics Management, vol. 25 no. 3
Type: Research Article
ISSN: 0957-4093

Keywords

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