Multi-attribute Goods Research Articles

The Role of Knowledge in Choice, Valuation, and Outcomes for Multi-Attribute Goods

Abstract Though the number of choices that individuals routinely must make has proliferated, comparatively little attention has been paid in the economics literature to consumer – compared to expert – knowledge, and its role in facilitating valuation and affecting choice outcomes. In this article, I review relevant work in economics, and then focus on research on knowledge that has used wine as the object of interest. Psychologists and sensory scientists have studied the role of wine expertise in sensory perception and categorization, and I review this literature to suggest how knowledge might also affect valuation and choice in the wine market. I finish by describing three recent studies on the role of knowledge in consumer valuation, information use, and choice outcomes in the American wine market. All three studies provide strong evidence that consumer knowledge is an important variable to consider in markets for differentiated products. Knowledge allows people to make greater use of objective label information when valuing wine in an experimental auction context, with high knowledge participants updating their bids more after participants received new information. In a field experiment, we find that high knowledge consumers derive greater value when selecting wines from a substantial inventory than do low knowledge consumers.

What floats your boat? Preference revelation from lotteries over complex goods

We examine a type of lottery used to distribute some publicly held resource access rights. The lottery provides participants with the opportunity to choose among a set of simple gambles over multi-attribute goods. Participant choices result in an endogenous distribution of success rates over gambles that reflects tradeoffs between the relative desirability of the available goods and the probability of winning. When lottery winnings are multi-attribute goods, lottery outcomes provide sufficient information to estimate hedonic prices, marginal utility, and marginal rates of substitution among attributes. We develop a model for characterizing preferences from this information set. We apply our model to Idaho׳s Four Rivers Whitewater Recreation Lottery, which allows applicants to apply for one permit among a large set of alternative river/day combinations that provide varying river and weather characteristics. This lottery structure shows promise as a foundation for economic experiments for preference revelation.

Characterization of Public and Stakeholder Objectives in Environmental Management: New Hampshire’s Lamprey River

AbstractManagement plans for natural resources can be viewed as policy instruments that deliver multiattribute goods held in the public domain, requiring input from experts, stakeholders, and citiz...

Preferences for tap water attributes within couples: An exploration of alternative mixed logit parameterizations

Preferences for attributes of complex goods may differ substantially among members of households. Some of these goods, such as tap water, are jointly supplied at the household level. This issue of jointness poses a series of theoretical and empirical challenges to economists engaged in empirical nonmarket valuation studies. While a series of results have already been obtained in the literature, the issue of how to empirically measure these differences, and how sensitive the results are to choice of model specification from the same data, is yet to be clearly understood. In this paper we use data from a widely employed form of stated preference survey for multiattribute goods, namely choice experiments. The salient feature of the data collection is that the same choice experiment was applied to both partners of established couples. The analysis focuses on models that simultaneously handle scale as well as preference heterogeneity in marginal rates of substitution (MRS), thereby isolating true differences between members of couples in their MRS, by removing interpersonal variation in scale. The models employed are different parameterizations of the mixed logit model, including the willingness to pay (WTP)‐space model and the generalized multinomial logit model. We find that in this sample there is some evidence of significant statistical differences in values between women and men, but these are of small magnitude and only apply to a few attributes.

A calibrated auction-conjoint valuation method: Valuing pork and eggs produced under differing animal welfare conditions

This paper develops a valuation method which generates consistent and systematic estimates of people's preferences for complex multi-attribute goods by inextricably linking auction bids with conjoint ratings. The advantage of the valuation approach is that it permits the estimation of people's values for many potential goods, allows one to decompose people's values for a good into its sub-components, and permits the study of preference heterogeneity without distributional assumptions. We apply the method to an important and increasingly controversial topic: animal welfare. The method is used to determine people's preferences for eggs and pork produced from different production systems. Data from experiments conducted in three diverse U.S. locations (Chicago, IL; Dallas, TX; and Wilmington, NC) indicates that people are, on average, willing to pay $0.95 more for a dozen eggs raised in an aviary, pasture system vs. a cage system, and are willing to pay $2.02 more for two-pounds of pork chops raised in a pasture system as opposed to a crate system.

選択実験型コンジョイント分析による環境リスク情報のもたらす順序効果の検証

The development of a variety of stated preference methods has been an important agenda in the field of environmental valuation during the last decade. It leads to the wide use of those methods for costbenefit analyses. In this article, choice modeling is examined as to whether or not it is reliable for the evaluation of agri-environmental policy measures such as the direct payment and rice terrace partnership program. A choice modeling approach has an advantage in evaluating the multi-attribute environmental goods compared with contingent valuation method. Rice terrace has two different kinds of environmental impacts, i. e., environmental benefits (multifunctionality) and damage. Both environmentally positive and negative impacts should be evaluated simultaneously. Otherwise, the result is considered to be biased. The choice modeling can accommodate a number of attributes. Therefore, it is quite a useful tool to assess the environmental value of multi-attribute goods. Environmental benefits are classified into two categories.One is the conservation of rural landscapes and ecosystems, and the other is disaster prevention. As for environmental damage, water contamination caused by the excessive application of pesticide and fertilizer is presented.A mail survey was conducted in July, 2001. Two types of questionnaires were mailed to 400 general households in Kamogawa-city. Samples were randomly chosen from the telephone directory. The difference of those questionnaires appears in an order of attributes and their explanation. Exchanging the attributes between an environmental benefit and damage enables an analysis of an order effect. Their overall response rates were 74.5% and 82.0%, respectively.This experimental choice technique produced marginal willingness-to-pays for three types of environmental impacts with statistical significance of key variables. Marginal willingness-to-pays for water contamination were at least twice as high as those of two environmental benefits.An order effect of the questionnaire design was tested using likelihood ratio test and t test. Consequently, an order effect was statistically revealed. This finding suggests the choice modeling is not an ideal tool for environmental valuation. It is also affected by some biases due to respondents inconsistent attitude toward environmental risk.

Learning and the Cognitive Algebra of Price Expectations

We investigate how consumers learn to form price expectations for multiattribute goods in novel product categories. We hypothesize that expectations of price among novice consumers will be dominated by simplistic intuitive conjectures about the costs of goods that would cause expectations of prices to depart systematically from “true” values. Although we hypothesize that judgments should become more accurate—and configural—as expertise grows, we also hypothesize that learning will be limited, with even experienced consumer judges displaying some of the same biases in price expectations observed among novices. We tested these hypotheses in two studies: a dynamic laboratory task that simulated a period of learning about prices in a novel category and a cross‐sectional survey that compared the multiattribute price‐expectation rules used by novice and experienced consumers. The results provide a somewhat surprising view of the dynamics of price‐expectation policies. First, Study 1 shows that composition rules used by novices can be highly configural in nature, even when they lack knowledge about the true rules that govern the price of goods in a category. Second, both studies support the hypothesis of limited learning, with judgments strategies of experienced consumers being only slightly more accurate in anticipating true normal market prices than those used by inexperienced consumers. A discussion of the implications of the work for research in how consumers learn to form price expectations is offered.