Asymmetric preference formation in willingness to pay estimates in discrete choice models

Individuals when faced with choices amongst a number of alternatives often adopt a variety of processing rules, ranging from simple linear to complex non-linear treatment of each attribute defining the offer of each alternative. In this paper we investigate the presence of asymmetry in preferences to test for reference effects and differential willingness to pay according to whether we are valuing gains or losses. The findings offer clear evidence of an asymmetrical response to increases and decreases in attributes when compared to the corresponding values for a reference alternative, where the degree of asymmetry varies across attributes and population segments

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.freight transport, choice experiments, willingness to pay, preference asymmetry

The dark side of making transit irresistible: The example of France

The French experience in developing policies to reduce car use in metropolitan areas is presented in this paper as an illustration of the lack of recognition of the broader set of criteria on which specific policy frameworks should be judged. One of the major challenges, and often failings of policies focussed on reducing car use, is the lack of a structure that ensures that the downside impacts are not relocated to other parts of a system such that potential gains end up being eroded by the potential losses. We draw on experiences throughout France, as well as case studies in Lyon, to highlight the dark side of French transport policy promoting a switch from car to public transit and non-motorised modes, in terms of financial, equity and environmental outcomes.[This paper is based on research undertaken during a sabbatical year (2005–2006) at ITLS Sydney.]French transport policy ; Modal share ; Charging ; Car dominance ; Challenges for public transport

Estimation of value of travel-time savings using mixed logit models

In this paper, we discuss some of the issues that arise with the computation of the implied value of travel-time savings in the case of discrete choice models allowing for random taste heterogeneity. We specifically look at the case of models producing a non-zero probability of positive travel-time coefficients, and discuss the consistency of such estimates with theories of rational economic behaviour. We then describe how the presence of unobserved travel-experience attributes or conjoint activities can bias the estimation of the travel-time coefficient, and can lead to false conclusions with regards to the existence of negative valuations of travel-time savings. We note that while it is important not to interpret such estimates as travel-time coefficients per se, it is nevertheless similarly important to allow such effects to manifest themselves; as such, the use of distributions with fixed bounds is inappropriate. On the other hand, the use of unbounded distributions can lead to further problems, as their shape (especially in the case of symmetrical distributions) can falsely imply the presence of positive estimates. We note that a preferable solution is to use bounded distributions where the bounds are estimated from the data during model calibration. This allows for the effects of data impurities or model misspecifications to manifest themselves, while reducing the risk of bias as a result of the shape of the distribution. To conclude, a brief application is conducted to support the theoretical claims made in the paper

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

Australian telephone network subscription and calling demands: evidence from a stated-preference experiment

This paper examines the impact of the subscription-calling rate structure on the demand for residential telephone network subscription and calling. Stated-preference experimental data are used to estimate demand equations. The results indicate that household network subscription and calling demands for the Sydney Metropolitan Area are affected by both rate structure and household socio-demographic variables.Telecommunications demand; Subscription-calling rate structure; Stated-preference experimental analysis; Survey

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

Australian Bushfires and the Future

The summer fires in Australia mark a cataclysmic reminder that climate change is hurting our planet and that we need to recognise it and plan for a future that minimises the risk to humans and wildlife

The Importance of Organisational Commitment in Managing Change in the Bus Industry in Australia

In Australia there is a continuing trend in the transport sector towards corporatisation, privatisation, competitive regulation (ie tendering) and deregulation. With the implementation of the 1990 Passenger Transport Act in New South Wales, the urban bus industry has moved from a rigid system of licensing towards one of performance-based contracts. The new focus arising out of the legislation has centred on the quality of service delivery with pressing managerial implications. To date, little attention has been paid to the effects of organisational change on the role of middle management in the transport sector. While the current perception may be that the position of middle management is largely irrelevant following industry downsizing, it is contended that the role of the middle manager is reaffirmed at the centre of organisational change. This paper identifies the relationship between perceived satisfaction with the outcomes of change and organisational commitment and structure. Study findings demonstrate that organisational structure is important in the development of organisational commitment which in turn is vital in the effective implementation of organisational change