Experience as a conditioning effect on choice: Does it matter whether it is exogenous or endogenous?

Previous choice studies have proposed a way to condition the utility of each alternative in a choice set on experience with the alternatives accumulated over previous periods, defined either as a mode used or not in a most recent trip, or the mode chosen in their most recent trip and the number of similar one-way trips made during the last week. The paper found that the overall statistical performance of the mixed logit model improved significantly, suggesting that this conditioning idea has merit. Experience was treated as an exogenous influence linked to the scale of the random component, and to that extent it captures some amount of the heterogeneity in unobserved effects, purging them of potential endogeneity. The current paper continues to investigate the matter of endogeneity versus exogeneity. The proposed approach implements the control function method through the experience conditioning feature in a choice model. We develop two choice models, both using stated preference data. The paper extends the received contribution in that we allow for the endogenous variable to have an impact on the attributes through a two stage method, called the Multiple Indicator Solution, originally implemented in a different context and for a single (quality) attribute, in which stage two is the popular control function method. In the first stage, the entire utility expression associated with all observed attributes is conditioned on the prior experience with an alternative. Hence, we are capturing possible correlates associated with each and every attribute and not just one selected attribute. We find evidence of potential endogeneity. The purging exercise however, results in both statistical similarities and differences in time and cost choice elasticities and mean estimates of the value of travel time savings. We are able to identify a very practical method to correct for possible endogeneity under experience conditioning that will encourage researchers and practitioners to use such an approach in more advanced non-linear discrete choice models as a matter of routine.

     

A sequential approach to exploiting the combined strengths of SP and RP data: Application to freight shipper choice

The possibility of and procedure for pooling RP and SP data have been discussed in recent research work. In that literature, the RP data has been viewed as the yardstick against which the SP data must be compared. In this paper we take a fresh look at the two data types. Based on the peculiar strengths and weaknesses of each we propose a new, sequential approach to exploiting the strengths and avoiding the weaknesses of each data source. This approach is based on the premise that SP data, characterized by a well-conditioned design matrix and a less constrained decision environment than the real world, is able to capture respondents' tradeoffs more robustly than is possible in RP data. (This, in turn, results in more robust estimates of share changes due to changes in independent variables.) The RP data, however, represent the current market situation better than the SP data, hence should be used to establish the aggregate equilibrium level represented by the final model. The approachfixes the RP parameters for independent variables at the estimated SP parameters but uses the RP data to establish alternative-specific constants. Simultaneously, the RP data are rescaled to correct for error-in-variables problems in the RP design matrixvis-à- vis the SP design matrix. All specifications tested are Multinomial Logit (MNL) models.The approach is tested with freight shippers' choice of carrier in three major North American cities. It is shown that the proposed sequential approach to using SP and RP data has the same or better predictive power as the model calibrated solely on the RP data (which is the best possible model for that data, in terms of goodness-of-fit figures of merit), when measured in terms of Pearson's Chi-squared ratio and the percent correctly predicted statistic. The sequential approach is also shown to produce predictions with lower error than produced by the more usual method of pooling the RP and SP data.     

A non-compensatory choice model incorporating attribute cutoffs

This research proposes an extension to the traditional compensatory utility maximization framework which has guided most theoretical and statistical work in choice modeling applications, including those in transportation demand estimation work. Attribute cutoffs are incorporated into the decision problem formulation; it is then argued on extant empirical evidence that individuals may view these constraints as “soft”. This leads to the formulation of a penalized utility function that allows for constraint violation, but at a cost to the overall evaluation of the good. The proposed model is able to represent fully compensatory, conjunctive and disjunctive choice strategies, as well as combinations thereof. The properties of the proposed theoretical model are examined and discussed. From the theoretical framework, statistical models of choice behavior are easily derived; in their simplest forms, these models can be estimated using existing software. A Stated Preference choice experiment is analyzed using the proposed model, which is found to be highly consistent with observed choices and superior to a structural two-stage choice set formation model.