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The Heterogeneous Aggregate Valence Analysis (HAVAN) Model: A Flexible Approach to Modeling Unobserved Heterogeneity in Discrete Choice Analysis

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  • Connor R. Forsythe
  • Cristian Arteaga
  • John P. Helveston

Abstract

This paper introduces the Heterogeneous Aggregate Valence Analysis (HAVAN) model, a novel class of discrete choice models. We adopt the term "valence'' to encompass any latent quantity used to model consumer decision-making (e.g., utility, regret, etc.). Diverging from traditional models that parameterize heterogeneous preferences across various product attributes, HAVAN models (pronounced "haven") instead directly characterize alternative-specific heterogeneous preferences. This innovative perspective on consumer heterogeneity affords unprecedented flexibility and significantly reduces simulation burdens commonly associated with mixed logit models. In a simulation experiment, the HAVAN model demonstrates superior predictive performance compared to state-of-the-art artificial neural networks. This finding underscores the potential for HAVAN models to improve discrete choice modeling capabilities.

Suggested Citation

  • Connor R. Forsythe & Cristian Arteaga & John P. Helveston, 2024. "The Heterogeneous Aggregate Valence Analysis (HAVAN) Model: A Flexible Approach to Modeling Unobserved Heterogeneity in Discrete Choice Analysis," Papers 2402.00184, arXiv.org.
  • Handle: RePEc:arx:papers:2402.00184
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    3. Chris Kavalec, 1999. "Vehicle Choice in an Aging Population: Some Insights from a Stated Preference Survey for California," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 123-138.
    4. Czajkowski, Mikołaj & Budziński, Wiktor, 2019. "Simulation error in maximum likelihood estimation of discrete choice models," Journal of choice modelling, Elsevier, vol. 31(C), pages 73-85.
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