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Product availability in discrete choice experiments with private goods

Daniel Chavez (), Marco Palma (), Rodolfo Nayga and James W. Mjelde

Journal of choice modelling, 2020, vol. 36, issue C

Abstract: The proneness of stated preference methods to different biases has increased the popularity of incentivized choice experiments (ICE). ICEs, however, are not free from challenges. One such challenge when using ICEs in market valuation is that some product alternatives may not be available to incentivize experiments. In this context, withholding information about product availability could be considered deception while disclosing information raises questions regarding influences on participants’ choice behavior. The present study explores this issue by changing the number of available product alternatives in an induced value choice experiment. Participant engagement is captured using an eye-tracking and measurement scales. The results suggest, while incentives matter, engagement matters more. A random-effects logit estimation reveals that engagement is positively correlated with profit-maximizing behavior, while the number of available alternatives is not. A similar result of engagement holds after accounting for differences in payouts between alternatives. In contrast, the same thing cannot be said for number of available alternatives. When the difference between potential payouts is small, no number of available alternatives has a significant effect on profit-maximizing behavior. When the difference between payouts is larger, any number of available alternatives increases the likelihood of choosing the profit-maximizing choice. The findings suggest that researchers could successfully conduct ICE with trustworthy results without having all the product alternatives being available as long as participants are engaged in the choice task.

Keywords: Choice experiments; Eye-tracking; Hypothetical bias; Induced values (search for similar items in EconPapers)
JEL-codes: C18 C91 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eejocm:v:36:y:2020:i:c:s1755534520300245

DOI: 10.1016/j.jocm.2020.100225

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