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About Attitudes and Perceptions: Finding the Proper Way to Consider Latent Variables in Discrete Choice Models

Francisco J. Bahamonde-Birke, Uwe Kunert, Heike Link and Juan de Dios Ortúzar

No 1474, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We provide an in-depth theoretical discussion about the differences between attitudes and perceptions, as well as an empirical exercise to analyze its effects. This discussion is of importance, as the large majority of papers considering attitudinal latent variables, just consider those as attributes affecting directly the utility of a certain alternative while systematic taste variations are rarely taken into account and perceptions are normally completely ignored. The results of our case study show that perceptions may indeed affect the decision making process and that they are able to capture a significant part of the variability that is normally explained by alternative specific constants. In the same line, our results indicate that attitudes may be a reason for systematic taste variations, and that a proper categorization of the latent variables, in accordance with the underlying theory, may outperform the customary assumption of linearity.

Keywords: Hybrid Discrete Choice Modelling; Latent Variables; Attitudes; Perceptions (search for similar items in EconPapers)
JEL-codes: C50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-ecm and nep-upt
Date: 2015
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Journal Article: About attitudes and perceptions: finding the proper way to consider latent variables in discrete choice models (2017) Downloads
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