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Selecting random parameters in discrete choice experiment for environmental valuation: A simulation experiment

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  • Mariel Chladkova, Petr
  • De Ayala Bilbao, Amaya
  • Hoyos Ramos, David
  • Abdullah, Sabah

Abstract

This paper examines the various tests commonly used to select random parameters in choice modelling. The most common procedures for selecting random parameters are: the Lagrange Multiplier test as proposed by McFadden and Train (2000), the t-statistic of the deviation of the random parameter and the log-likelihood ratio test. The identification of random parameters in other words the recognition of preference heterogeneity among population is based on the fact that an individual makes a choice depending on her/his: tastes, perceptions and experiences. A simulation experiment was carried out based on a real choice experiment and the results indicated that the power of these three tests depends importantly on the spread and type of the tested parameter distribution.

Suggested Citation

  • Mariel Chladkova, Petr & De Ayala Bilbao, Amaya & Hoyos Ramos, David & Abdullah, Sabah, 2010. "Selecting random parameters in discrete choice experiment for environmental valuation: A simulation experiment," BILTOKI 1134-8984, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    • Handle: RePEc:ehu:biltok:5564
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    7. Mamine, Fateh & Fares, M'hand & Minviel, Jean Joseph, 2020. "Contract Design for Adoption of Agrienvironmental Practices: A Meta-analysis of Discrete Choice Experiments," Ecological Economics, Elsevier, vol. 176(C).
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    9. Prosper Houessionon & William M. Fonta & Aymar Y. Bossa & Safiétou Sanfo & Noel Thiombiano & Pam Zahonogo & Thomas B. Yameogo & Bedru Balana, 2017. "Economic Valuation of Ecosystem Services from Small-Scale Agricultural Management Interventions in Burkina Faso: A Discrete Choice Experiment Approach," Sustainability, MDPI, vol. 9(9), pages 1-16, September.
    10. Luís C. Rodrigues & Jeroen C. J. M. Bergh & Maria L. Loureiro & Paulo A. L. D. Nunes & Sergio Rossi, 2016. "The Cost of Mediterranean Sea Warming and Acidification: A Choice Experiment Among Scuba Divers at Medes Islands, Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 289-311, February.
    11. Hoyos, David & Mariel, Petr & Pascual, Unai & Etxano, Iker, 2012. "Valuing a Natura 2000 network site to inform land use options using a discrete choice experiment: An illustration from the Basque Country," Journal of Forest Economics, Elsevier, vol. 18(4), pages 329-344.
    12. Mattson, Jeremy & Hough, Jill & Varma, Amiy, 2018. "Estimating demand for rural intercity bus services," Research in Transportation Economics, Elsevier, vol. 71(C), pages 68-75.
    13. Baker, K. & Baylis, K. & Bull, G.Q. & Barichello, R., 2019. "Are non-market values important to smallholders' afforestation decisions? A psychometric segmentation and its implications for afforestation programs," Forest Policy and Economics, Elsevier, vol. 100(C), pages 1-13.
    14. María Feo-Valero & Leandro García-Menéndez & Salvador Saz-Salazar, 2016. "Rail freight transport and demand requirements: an analysis of attribute cut-offs through a stated preference experiment," Transportation, Springer, vol. 43(1), pages 101-122, January.
    15. Stefano Mainardi, 2021. "Preference heterogeneity, neighbourhood effects and basic services: logit kernel models for farmers’ climate adaptation in Ethiopia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(5), pages 6869-6912, May.
    16. Haghani, Milad & Sarvi, Majid & Shahhoseini, Zahra, 2015. "Accommodating taste heterogeneity and desired substitution pattern in exit choices of pedestrian crowd evacuees using a mixed nested logit model," Journal of choice modelling, Elsevier, vol. 16(C), pages 58-68.
    17. De Ayala Bilbao, Amaya & Hoyos Ramos, David & Mariel Chladkova, Petr, 2012. "Landscape valuation through discrete choice experiments: Current practice and future research reflections," BILTOKI 1134-8984, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    18. Greiner, Romy, 2014. "Willingness of north Australian pastoralists and graziers to participate in contractual biodiversity conservation," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165839, Australian Agricultural and Resource Economics Society.
    19. Greiner, Romy, 2015. "Motivations and attitudes influence farmers' willingness to participate in biodiversity conservation contracts," Agricultural Systems, Elsevier, vol. 137(C), pages 154-165.
    20. María Feo-Valero & Leandro García-Menéndez & Salvador del Saz-Salazar, 2016. "Rail freight transport and demand requirements: an analysis of attribute cut-offs through a stated preference experiment," Transportation, Springer, vol. 43(1), pages 101-122, January.
    21. Houessionon, P. & Fonta, W. M. & Bossa, A. Y. & Sanfo, S. & Thiombiano, N. & Zahonogo, P. & Yameogo, T. B. & Balana, Bedru, "undated". "Economic valuation of ecosystem services from small-scale agricultural management interventions in Burkina Faso: a discrete choice experiment approach," Papers published in Journals (Open Access) H048370, International Water Management Institute.
    22. Jesús Clemente López & Pedro García Castrillo & María A. González Alvarez & Marcos Sanso Frago, 2014. "Una evaluación de la efectividad de la formación ocupacional para desempleados antes y después de la crisis económica: el caso de Aragón," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 77-106, March.

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    More about this item

    Keywords

    choice experiment; preference heterogeneity; random parameter logit; simulation; tests for selecting random parameters;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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