| By: |
Riera, Antoni;
Hanley, Nick;
Torres, Cati |
| Abstract: |
Despite the vital role of utility functional form in welfare measurement, the
implications of working with incorrect utility specifications have not been
examined in the choice experiments (CE) literature. This paper addresses the
importance of the specification of both non-monetary attributes and the
marginal utility of income. Monte Carlo experiments have been conducted
wherein different attribute specifications and assumptions for the Cost
parameter -that is, different functional forms of utility- have been assumed
to generate simulated choices on which Multi-Nomial Logit and Mixed Logit
models have been estimated under correct and incorrect assumptions about the
true, underlying utility function. The inferred values have been compared with
the true ones directly calculated from the true utility specifications.
Results show that working with simple experimental designs and
continuous-linear specifications makes attribute specification irrelevant for
measuring attribute marginal values regardless of the true effects the
attribute has on utility. |
| Keywords: |
Monte Carlo analysis; choice experiments; efficiency; accuracy; welfare measurement; attributes; utility specification |
| Date: |
2009–02 |
| URL: |
http://d.repec.org/n?u=RePEc:stl:stledp:2009-07&r=dcm |