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Linking perceived choice complexity with scale heterogeneity in discrete choice experiments: home heating in Finland

Author

Listed:
  • Enni Ruokamo

    (Finnish Environment Institute (SYKE); Department of Economics)

  • Mikołaj Czajkowski

    (Faculty of Economic Sciences, University of Warsaw)

  • Nick Hanley

    (Department of Geography and Sustainable Development, University of St Andrews)

  • Artti Juutinen

    (Department of Economics, Oulu Business School; Natural Resources Institute Finland (Luke))

  • Rauli Svento

    (Department of Economics, Oulu Business School)

Abstract

Choosing a specific heating system is a complex and difficult decision for homeowners as there exists a wide array of heating technologies with different characteristics that one can consider before purchasing. We include multiple heating technologies and attributes in our Choice Experiment design and explore the effect of perceived choice complexity on the randomness of choices. In particular, we investigate how different self-evaluated factors of choice complexity affect mean scale and scale variance. Our findings suggest that perceived choice complexity has a systematic impact on the parameters of econometric models of choice. However, there are differences between alternative self-evaluated complexity-related covariates. Results indicate that individuals who report that answering the choice tasks was difficult have less deterministic choices. Perceptions of the realism of home heating choice options also affect scale and scale variance.

Suggested Citation

  • Enni Ruokamo & Mikołaj Czajkowski & Nick Hanley & Artti Juutinen & Rauli Svento, 2016. "Linking perceived choice complexity with scale heterogeneity in discrete choice experiments: home heating in Finland," Working Papers 2016-30, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2016-30
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    More about this item

    Keywords

    Home heating; Choice experiment; Choice modelling; Scale heterogeneity; Generalized mixed logit; Complexity;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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