Parameter transfer of common-metric attributes in choice analysis: implications for willingness to pay

There is a growing literature that promotes the presence of a mix of compensatory and semi-compensatory processing strategies in the way that individuals evaluate packages of attributes in real or hypothetical markets, and make choices. This paper proposes a specification for the utility form in a choice model to test if, given a pair of attributes with a common-metric (e.g., components of travel time or cost), the attribute with the dominating level defines the marginal (dis)utility that is assigned to both attributes. We refer to this processing strategy as a parameter transfer rule. We use a stated choice data set, in the context of car driving individuals choosing between tolled and non-tolled routes, to estimate a mixed logit model which incorporates the presence of the parameter transfer rule and the conventional fully compensatory rule, both existing up to a probability. We find that if this parameter transfer heuristic is part of the mix, the WTP is more than 30% higher, on average, than when only a fully compensatory rule is imposed. We also contrast the parameter transfer rule with other semi-compensatory heuristics which have been investigated in other papers, and show that the finding adds further support to the accumulating evidence that a semi-compensatory attribute processing rules tend to result in higher mean WTP estimates compared to the fully compensatory attribute processing rule.     

Identifying a behaviourally relevant choice set from stated choice data

Stated choice experiments are designed optimally in a statistical sense but not necessarily in a behavioural choice making sense. Statistical designs, and consequently model estimation, assume that the set of alternatives offered in the experiment are processed by respondents with a specific processing strategy. Much has been studied about attribute processing using discrete choice methods in travel choice studies, but this paper focuses more broadly on processing of alternatives in the choice set offered in the experiment. This paper is motivated by the primary idea that the distribution of predicted choice probabilities associated with a set of alternatives defining a given choice set might provide strong evidence on the strategies that agents appear to use when choosing a preferred alternative. In an empirical setting of a choice set of size three, four model specifications are considered including a model for the selection of the best alternative in the full choice set and three variants of a best–worst regime. Using state choice data on road pricing reform, the empirical analysis examines which model specification delivers the most accurate prediction of the chosen alternative. The results suggest which alternatives really matter in choice making and hence the alternatives that might be included in a choice set for model specification.     

Extending stated choice analysis to recognise agent-specific attribute endogeneity in bilateral group negotiation and choice: a think piece

This paper is a think piece on variations in the structure of stated preference studies when modelling the joint preferences of interacting agents who have the power to influence the attribute levels on offer. The approach proposed is an extension of standard stated choice methods, known as ‘stated endogenous attribute level’ (SEAL) analysis. It allows for interactive agents to adjust attribute levels off a base stated choice specification that are within their control, in an effort to reach agreement in an experimental setting. This accomplishes three goals: (1) the ability to place respondents in an environment that more closely matches interactive settings in which some attribute levels are endogenous to a specific agent, should the modeller wish to capture such behaviour; (2) the improved ability of the modeller to capture the behaviour in such settings, including a greater wealth of information on the related interaction processes, rather than simply outcomes; and (3) the expansion of the set of situations that the modeller can investigate using experimental data.

Aggregation of common-metric attributes in preference revelation and implications for willingness to pay

There is a growing interest in process heterogeneity in the way that individuals evaluate packages of attributes in real or hypothetical markets and make choices. We consider the role of the relative magnitude of pairs of attributes that are defined on a common metric (e.g., minutes or dollars), to look at the extent to which attributes might be added in preference revelation, in contrast to the commonly adopted single rule of compensatory behaviour. The focus is on a choice model specification that allows for different treatments of pairs of attributes across a sample, in contrast to studies that impose a single rule on all observations, and that does not require supplementary information on whether specific individuals claimed to have added up attributes; rather we structure a non-linear utility function that permits a probabilistic aggregation of each attribute. We translate this into a willingness to pay for travel time-savings for car commuters, in the context of tolling roads in Sydney, and contrast it with the results from the additive model, and a model where self-stated attribute processing information is taken into account. The empirical evidence suggests that mean willingness to pay increases when the addition rule is accounted for. This is a potentially important message for environmental applications where two or more attributes have a common metric.     

The influence of transport on industrial location choice: a stated preference experiment

Stated preference experiments are introduced and applied to an investigation of the influence of road transport and other factors on industrial location in terms of the ex ante decision making process. The experiments, based upon repeated hypothetical discrete choices between pairs of locations, involved respondents from firms making trade-offs between the various characteristics in a fractional factorial, orthogonal survey design. In each defined case, a clear hierarchy of location factors emerged. These were found to vary according to the origin of the firm – classified as local relocations, foreign inward investors, and branch plants sourced from national bases. The importance of road links to location choice varied considerably between these groups with the latter rating motorway links the highest of any of the groups of firms. In contrast, overseas sourced branch firms found road links largely unimportant, being outweighed primarily by considerations of workforce and premises. Local relocations fell into two distinct groups with respect to the importance attached to road links (between relatively important and non-important), whilst considering the other factors similarly. Good public transport provision emerged as a statistically significant factor only in certain scenarios. Finally, the paper discusses implications for location choice models in transport and further research.     

Rail freight transport and demand requirements: an analysis of attribute cut-offs through a stated preference experiment

This paper analyses the choice between road and rail in Spain where rail market share for freight is still residual. Discrete choice models are estimated with data obtained through a two-phase fieldwork, thus allowing us to carry out a stated preference efficient design for each interviewee. We analyse the existence of attribute cut-offs and the presence of a segment of the population with a zero value of frequency. Our results show that ignoring the existence of cut-offs and segments of the population with polarised valuations can lead to erroneous conclusions in terms of the possibilities of rail for absorbing significant quota.     

Analyzing loss aversion and diminishing sensitivity in a freight transport stated choice experiment

Choice behaviour might be determined by asymmetric preferences whether the consumers are faced with gains or losses. This paper investigates loss aversion and diminishing sensitivity, and analyzes their implications on willingness to pay and willingness to accept measures in a reference pivoted choice experiment in a freight transport framework. The results suggest a significant model fit improvement when preferences are treated as asymmetric, proving both loss aversion and diminishing sensitivity. The implications on willingness to pay and willingness to accept indicators are particular relevant showing a remarkable difference between symmetric and asymmetric model specifications. Not accounting for loss aversion and diminishing sensitivity, when present, produces misleading results and might affect significantly the policy decisions.     

Household demand and willingness to pay for clean vehicles

This paper examines the factors and incentives that are most likely to influence households’ choice for cleaner vehicles in the metropolitan area of Hamilton, Canada. Data collection is based on experimental design and stated choice methods through an Internet survey. Choice alternatives included a conventional gasoline, a hybrid and an alternative fuelled vehicle. Each option is described by a varying set of vehicle attributes and economic incentives, customized per respondent. Controlling for individual, household and dwelling-location characteristics, parameters of a nested logit model indicates that reduced monetary costs, purchase tax relieves and low emissions rates would encourage households to adopt a cleaner vehicle. On the other hand, incentives such as free parking and permission to drive on high occupancy vehicle lanes with one person in the car were not significant. Furthermore, limited fuel availability is a concern when households considered the adoption of an alternative fuelled vehicle. Finally, willingness-to-pay extra for a cleaner vehicle is computed based on the estimated parameters.     

Understanding suburban travel demand: Flexible modelling with revealed and stated choice data

We analyse the choice of mode in suburban corridors using nested logit specifications with revealed and stated preference data. The latter were obtained from a choice experiment between car and bus, which allowed for interactions among the main policy variables: travel cost, travel time and frequency. The experiment also included parking cost and comfort attributes. The attribute levels in the experiment were adapted to travellers’ experience using their revealed preference information. Different model specifications were tested accounting for the presence of income effect, systematic taste variation, and incorporating the effect of latent variables. We also derived willingness-to-pay measures, such as the subjective value of time, that vary among individuals as well as elasticity values. Finally, we analysed the demand response to various policy scenarios that favour public transport use by considering improvements in level-of-service, fare reductions and/or increases in parking costs. In general, demand was shown to be more sensitive to policies that penalise the private car than those improving public transport.     

Intention and willingness to pay for green freight transportation: An empirical examination

The objective of this paper is to explore what motivates consumer intention and willingness to pay for green transportation. The model is based on the theory of planned behavior and explains the relationship between consumer attitude, perceived behavioral control and peer pressure on intention and willingness to pay for a t-shirt that was transported using energy efficient fuel. Data from a survey of U.S. consumers is analyzed. Results suggest consumer attitude and peer pressure are positively associated with intention which is positively associated with willingness to pay. High levels of consumer attitude, perceived behavioral control and intention suggest a positive outlook for organizations investing in green transportation initiatives. Results also suggest a need for organizations and government to market and educate consumers and citizens about the positive implications of green transportation and using energy efficient fuel.     

Design and development of a stated choice experiment for interdependent agents: accounting for interactions between buyers and sellers of urban freight services

Stated choice experiments have proven to be a powerful tool in eliciting preferences across a broad range of choice settings. This paper outlines the elements of a group-based experiment designed for interdependent urban freight stakeholders, along with the procedure to administer the questionnaire sequentially. The focus is on the design of a computer-assisted personal survey instrument and the value in disseminating the details of a new approach to design and collect stated choice data for interacting agents. The paper also discusses how to specify a reference alternative, and then how to recruit appropriate real-market or representative decision-making group members to participate in a subsequent phase of the survey, which incorporates the reference alternative and contextual information from an initial phase. The empirical strategy, set out in some detail, provides a new framework within which to understand more fully the role that specific attributes, such as variable user charges, influencing freight distribution chains might play, and who in the supply chain is affected by specific attributes in terms of willingness to pay for the gains in distribution efficiency.

Towards a practical method to establish comparable values of travel time savings from stated choice experiments with differing design dimensions

Individual’s process the information in stated choice (SC) experiments in many different ways. In order to accommodate decisions rules that are used in processing information, there is good sense in conditioning the parameterisation of stated choice design attributes on these rules. In particular, rules might be invoked to cope with the dimensionality of the SC design. In this paper, we investigate the impact of rules such as attribute aggregation and reference dependency on preference profiles for specific design attributes, as well as the design specification, as we vary the dimensionality of an SC design. The heteroscedastic extreme value logit model is estimated to identify the role of design dimensionality and attribute processing rules, after accounting for scale differences across sixteen pooled data designs The empirical evidence, drawn from a study in Sydney of car commuter route choice, suggests that accounting for the way that stated choice designs are processed, given their dimensionality, does make a statistically significant difference on measures of willingness to pay, as does accounting for scale differences between pooled data designs. This evidence has practical value in guiding the design of SC experiments and in adjusting results from different SC designs when comparing the evidence. We propose a simple adjustment formula to use in adjusting VTTS from different studies so that they are comparable. From a practical policy perspective, the evidence sends a warning about the risk of undervaluing mean VTTS if the attribute processing rules are not accounted for.     

Consumer preferences and willingness to pay for advanced vehicle technology options and fuel types

The automotive industry is witnessing a revolution with the advent of advanced vehicular technologies, smart vehicle options, and fuel alternatives. However, there is very limited research on consumer preferences for such advanced vehicular technologies. The deployment and penetration of advanced vehicular technologies in the marketplace, and planning for possible market adoption scenarios, calls for the collection and analysis of consumer preference data related to these emerging technologies. This study aims to address this need, offering a detailed analysis of consumer preference for alternative fuel types and technology options using data collected in stated choice experiments conducted on a sample of consumers from six metropolitan cities in South Korea. The results indicate that there is considerable heterogeneity in consumer preferences for various smart technology options such as wireless internet, vehicle connectivity, and voice command features, but relatively less heterogeneity in the preference for smart vehicle applications such as real-time traveler information on parking and traffic conditions.     

Electric vehicles and residential parking in an urban environment: Results from a stated preference experiment

This paper presents the results of a preference survey of 1545 respondents’ willingness to purchase electric vehicles (EVs) in Philadelphia. We pay particular attention to respondents’ willingness to pay for convenient charging systems and parking spaces. If the value of dedicated parking substantially outweighs the value of convenient charging systems, residential-based on-street charging systems are unlikely to ever be politically palatable. As expected, respondents are generally willing to pay for longer range, shorter charging times, lower operating costs, and shorter parking search times. For a typical respondent, a $100 per month parking charge decreases the odds of purchasing an EV by around 65%. Across mixed logit and latent class models, we find substantial variation in the willingness to pay for EV range, charge time, and ease of parking. Of note, we find two primary classes of respondents with substantially different EV preferences. The first class tends to live in multifamily housing units in central parts of the city and puts a high value on parking search time and the availability of on-street charging stations. The second class, whose members are likelier to be married, wealthy, conservative, and residing in single-family homes in more distant neighborhoods, are willing to pay more for EV range and charge time, but less for parking than the first group. They are also much likelier to consider purchasing EVs at all. We recommend that future research into EV adoption incorporate neighborhood-level features, like parking availability and average trip distances, which vary by neighborhood and almost certainly influence EV adoption.     

A stated preference examination of time of travel choice for a recreational trip: An addendum

A paper was published in the immediately previous issue of this journal describing a stated preference experiment examining how people are influenced in the selection of a departure time for a hypothetical trip to see a movie. The title was ‘A stated preference examination of time of travel choice for a recreational trip’, Volume 30(3):17–44. Numbers were used to indicate references in the text of the paper and in Table 1 accompanying the text, but these numbers were omitted from the list of references at the end of the paper - making it very difficult to identify specific citations. The list of references from the paper is reprinted below with the reference numbers included. This provides a listing that can be used in conjunction with the text of the paper and Table 1 as published to identify specific citations as intended.     

Estimating the willingness to pay and value of risk reduction for car occupants in the road environment

In recent years there has been a re-focus on the valuation of a statistical life from the ex post or human capital method to an ex ante willingness to pay (WTP) approach. This is in part a recognition that we may have been undervaluing the cost of fatalities and injuries to society associated with crashes, but also a strong belief in the need to focus on establishing the amount, ex ante, that individuals are willing to pay to reduce the risk of exposure to circumstances that might lead to death or degree of injury on the road network. This study has developed a framework in which to identify the degree of preference heterogeneity in willingness to pay by individuals who are drivers or passengers in cars to avoid being killed or injured. A stated choice experiment approach is developed. The empirical setting is a choice of route for a particular trip that a sample of individuals periodically undertakes in Australia. The particular trip is described in enough detail to provide the respondent with a familiar market environment, providing all the relevant background information required for making a decision. Mixed logit models are estimated to obtain the marginal (dis)utilities associated with each influence on the choice amongst the attribute packages offered in the stated choice scenarios. These estimates are used to obtain the WTP distributions for fatality and injury avoidance, which are then aggregated to obtain estimates of the value of risk reduction (VRR), of which the fatality class is also known as the value of a statistical life (VSL).     

The accuracy of proxy responses in a stated choice setting: A re-examination and some controversial conclusions

Data is typically gathered from an individual respondent who represents the group or the household. This individual is often identified as the “primary decision maker” and is asked to provide responses as a proxy for the group given that the cost of interviewing each member individually is impractical and/or expensive. The collection of joint preferences is rarely undertaken, with the use of proxy responses not uncommon in travel behaviour research. Under such a framework, there exists an assumption that the primary decision maker has perfect knowledge of other group member preferences, and bargaining behaviour, and is able to synthesise this information when providing a response on their behalf. The validity of such an assumption however remains an open question, with recent research calling the reliability of proxy responses into account (Bateman and Munro, 2009). In this paper, using three models estimated in willingness to pay space, we examine the accuracy of proxy responses in a stated choice experiment. We find that there is overlap between a proxy response and the own preferences of the individual providing the proxy choice, but while the proxy responses fail to represent the full preference heterogeneity that exists in the actual choices made by individuals, the proxy responses in aggregate provide a suitable replacement for actual data, subject to a number of caveats.     

The prevalence of context-dependent adjustment of activity-travel patterns in energy conservation strategies: results from a mixture-amount stated adaptation experiment

People’s adaptive behaviour to increasing energy prices has been studied at length in transportation research. Prior research however has not addressed research questions concerning the contribution of travel-related changes in more encompassing energy conservation strategies. Moreover, context-dependency and choice under constraints has not been studies at any length. In this paper, we therefore report the results of a context-dependent elaboration of a mixture amount choice experiment to measure context-dependent responses to accumulative energy charges under budget constraints. Accounting for consumer heterogeneity in adaptive response behaviour, mixed logit analysis is used to analyse the extent and nature of adaptations of activity-travel behaviour and resource allocation in response to increasing energy costs. The results indicate that individuals are inclined to compensate for increased expenditures on energy due to price increases. Moreover, results show the existence of significant heterogeneity among respondents in terms of their adaptation strategies to various energy-saving choices.