Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/74185 
Year of Publication: 
2006
Series/Report no.: 
Nota di Lavoro No. 128.2006
Publisher: 
Fondazione Eni Enrico Mattei (FEEM), Milano
Abstract: 
In discrete choice experiments respondents are generally assumed to consider all of the attributes across each of the alternatives, and to choose their most preferred. However, results in this paper indicate that many respondents employ simplified lexicographic decision-making rules, whereby they have a ranking of the attributes, but their choice of an alternative is based solely on the level of their most important attribute(s). Not accounting for these simple decision-making heuristics introduces systemic errors and leads to biased point estimates, as they are a violation of the continuity axiom and a departure from the use of compensatory decision-making. In this paper the implications of lexicographic preferences are examined. In particular, using a mixed logit specification this paper investigates the sensitivity of individual-specific willingness to pay (WTP) estimates conditional on whether lexicographic decision-making rules are accounted for in the modelling of discrete choice responses. Empirical results are obtained from a discrete choice experiment that was carried out to address the value of a number of rural landscape attributes in Ireland.
Subjects: 
Continuity axiom
Discrete Choice Experiments
Lexicographic Preferences
Mixed Logit
Individual-Specific Willingness to Pay
JEL: 
C35
Q24
Q51
Document Type: 
Working Paper

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