Abstract
PurposeThis 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/approachWe 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.FindingsThe 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/valueThe 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.
Highlights
Choice experiments have been used for a long time to estimate consumer preferences and predict consumer behavior in market (Gao and Schroeder, 2009; Louviere and Hensher, 1982; Lusk and Schroeder, 2004) and non-market valuation studies (Adamowicz et al, 1998; Boxall et al, 1996; Morey et al, 2002)
In this paper, we systematically review the literature on important issues in choice experiments
With regard to predictive performance and external validity, the Regret Model (RRM) was found to perform significantly better than the random utility model (RUM), differences were generally small
Summary
Choice experiments have been used for a long time to estimate consumer preferences and predict consumer behavior in market (Gao and Schroeder, 2009; Louviere and Hensher, 1982; Lusk and Schroeder, 2004) and non-market valuation studies (Adamowicz et al, 1998; Boxall et al, 1996; Morey et al, 2002). A similar strategy was applied by Lanz and Provins (2012), who find significant influences of socio-demographic characteristics on status quo choice in the context of water provision in Switzerland Both studies incorporate attitudinal questions to separate protest responses based on the credibility of the scenario, aversion toward the payment vehicle and the feeling of being provided with insufficient information. Hensher et al (2012) provide a probabilistic model to incorporate attribute non-attendance based on a latent class approach Their basic idea assumes that each respondent is part of one of 2K classes (with an associated probability) each of which ignores a certain combination of K attributes. They used two follow-up questions after each choice set to account for possible adaptively rational behavior, including ignored attributes (either all, or for a specific alternative) and the possibility of adding up attributes along a experiments in common dimension (e.g. all cost attributes). Puckett and Hensher (2008) confirm that incorporating attribute-aggregation and ignored attributes into model estimation leads to very different WTP estimates compared to the standard bounded rational model
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