Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a latent class approach

There is a growing body of evidence in the non-market valuation literature suggesting that responses to a sequence of discrete choice questions tend to violate the assumptions typically made by analysts regarding independence of responses and stability of preferences. Heuristics such as value learning and strategic misrepresentation have been offered as explanations for these results. While a few studies have tested these heuristics as competing hypotheses, none have investigated the possibility that each explains the response behaviour of a subgroup of the population. In this paper, we make a contribution towards addressing this research gap by presenting an equality-constrained latent class model designed to estimate the proportion of respondents employing each of the proposed heuristics. We demonstrate the model on binary and multinomial choice data sources and find three distinct types of response behaviour. The results suggest that accounting for heterogeneity in response behaviour may be a better way forward than attempting to identify a single heuristic to explain the behaviour of all respondents

Households’ Willingness to Pay for Undergrounding Electricity and Telecommunications Wires

Underground telecommunications and low-voltage electricity networks have several advantages over overhead networks including reliability of supply, safety and improved visual amenity. The economic viability of replacing existing overhead networks with new underground networks depends on the value of these benefits to households, but no complete value estimates are available in the literature. This paper represents a contribution towards addressing this research gap. A stated choice survey is used to estimate willingness-to-pay for undergrounding in established residential areas in Canberra. Average willingness-to-pay is at least $6,838 per household and there is significant variation in preferences over the population. The results suggest that benefits would be highest in areas with higher household income and older residents where visual amenity, safety, tree trimming or restrictions on the use of yard space are of concern.Stated preference; willingness-to-pay; undergrounding; supply reliability

Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a latent class approach

There is a growing body of evidence in the non-market valuation literature suggesting that responses to a sequence of discrete choice questions tend to violate the assumptions typically made by analysts regarding independence of responses and stability of preferences. Heuristics such as value learning and strategic misrepresentation have been offered as explanations for these results. While a few studies have tested these heuristics as competing hypotheses, none have investigated the possibility that each explains the response behaviour of a subgroup of the population. In this paper, we make a contribution towards addressing this research gap by presenting an equality-constrained latent class model designed to estimate the proportion of respondents employing each of the proposed heuristics. We demonstrate the model on binary and multinomial choice data sources and find three distinct types of response behaviour. The results suggest that accounting for heterogeneity in response behaviour may be a better way forward than attempting to identify a single heuristic to explain the behaviour of all respondents.Choice experiment; latent class; ordering effects; strategic response; willingness-to-pay

A comparison of responses to single and repeated discrete choice questions

According to neoclassical economic theory, a stated preference elicitation format comprising a single binary choice between the status quo and one alternative is incentive compatible under certain conditions. Formats typically used in choice experiments comprising a sequence of discrete choice questions do not hold this property. In this paper, the effect on stated preferences of expanding the number of binary choice tasks per respondent from one to four is tested using a split sample treatment in an attribute-based survey relating to the undergrounding of overhead electricity and telecommunications wires. We find evidence to suggest that presenting multiple choice tasks per respondent decreases estimates of expected willingness to pay. Preferences stated in the first of a sequence of choice tasks are not significantly different from those stated in the incentive compatible single binary choice task, but, in subsequent choice tasks, responses are influenced by cost levels observed in past questions. Three behavioural explanations can be advanced – weak strategic misrepresentation, reference point revision and cost-driven value learning. The evidence is contrary to the standard assumption of truthful response with stable preferences.Choice experiment; willingness-to-pay; incentive compatibility; order effects; undergrounding

Strategic response to a sequence of discrete choice questions

According to neoclassical economic theory, the only stated preference elicitation format that can feasibly be employed in field studies to which truthful response can be the dominant strategy for all respondents is a single binary choice between the status quo and one alternative. In studies where the objective is estimation of preferences for multiple attributes of a good, it is preferred (and, in some cases, necessary) based on econometric considerations, to present respondents with a sequence of choice tasks. Economic theory predicts that utility-maximising respondents may find it optimal to misrepresent their preferences in this elicitation format. In this paper, the effect on stated preferences of expanding the number of choice tasks per respondent from one to four is tested using a split sample treatment in an attribute-based survey relating to the undergrounding of overhead electricity and telecommunications wires in the Australian Capital Territory. We find evidence to suggest that presenting multiple choice tasks per respondent decreases estimates of total willingness to pay and that this effect is related to the ordering of cost levels presented over the sequence of choice tasks. Two behavioural explanations can be advanced - a weak cost minimisation strategy, which implies divergence between stated and true preferences, and a ‘good deal / bad deal’ heuristic, in which stated preferences reflect true preferences that change over the course of the sequence of choice tasks. Preferences stated in the first of a sequence of choice tasks are not significantly different from those stated in the incentive compatible single binary choice task. A key objective of future research will be to establish whether this effect becomes less prevalent as the number of attributes and alternatives per choice task are increased.Choice experiments, willingness to pay, incentive compatibility, strategic behaviour, order effects, underground electricity, Research Methods/ Statistical Methods,

Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a probabilistic decision process model

There is a growing body of evidence in the non-market valuation literature suggesting that responses to a sequence of discrete choice questions tend to violate the assumptions typically made by analysts regarding independence of responses and stability of preferences. Decision processes (or heuristics) such as value learning and strategic misrepresentation have been offered as explanations for these results. While a few studies have tested these heuristics as competing hypotheses, none has investigated the possibility that each explains the response behaviour of a subgroup of the population. In this paper, we make a contribution towards addressing this research gap by presenting a probabilistic decision process model designed to estimate the proportion of respondents employing defined heuristics. We demonstrate the model on binary and multinomial choice data sources and find three distinct types of response behaviour. The results suggest that accounting for heterogeneity in response behaviour may be a better way forward than attempting to identify a single heuristic to explain the behaviour of all respondents.Choice experiment, decision process, ordering effects, strategic response, willingness to pay, Research Methods/ Statistical Methods, C25, L94, Q51,

Precision frequency measurements with interferometric weak values

We demonstrate an experiment which utilizes a Sagnac interferometer to measure a change in optical frequency of 129 kHz per root Hz with only 2 mW of continuous wave, single mode input power. We describe the measurement of a weak value and show how even higher frequency sensitivities may be obtained over a bandwidth of several nanometers. This technique has many possible applications, such as precision relative frequency measurements and laser locking without the use of atomic lines.Comment: 4 pages, 3 figures, published in PR

Ultrasensitive Beam Deflection Measurement via Interferometric Weak Value Amplification

We report on the use of an interferometric weak value technique to amplify very small transverse deflections of an optical beam. By entangling the beam's transverse degrees of freedom with the which-path states of a Sagnac interferometer, it is possible to realize an optical amplifier for polarization independent deflections. The theory for the interferometric weak value amplification method is presented along with the experimental results, which are in good agreement. Of particular interest, we measured the angular deflection of a mirror down to 560 femtoradians and the linear travel of a piezo actuator down to 20 femtometers