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WILLINGNESS TO PAY CONFIDENCE INTERVAL ESTIMATION METHODS: COMPARISONS AND EXTENSIONS

Valerio Gatta (), Edoardo Marcucci () and Luisa Scaccia ()

No 314, Working Papers from CREI Università degli Studi Roma Tre

Abstract: This paper systematically compares methods to build confidence intervals for willingness to pay measures in a discrete choice context. It contributes to the literature by including methods developed in other research fields. Monte Carlo simulations are used to assess the performance of all the methods considered. The various scenarios evaluated reveal a certain skewness in the estimated willingness to pay distribution. This should be reected in the con dence intervals. Results show that the commonly used Delta method, producing symmetric intervals around the point estimate, often fails to account for such a skewness. Both the Fieller method and the likelihood ratio test inversion method produce more realistic confidence intervals. Some bootstrap methods also perform reasonably well. Finally, empirical data are used to illustrate an application of the methods considered.

Keywords: Confidence intervals; willingness to pay; discrete choice models; elasticities; standard errors (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-ecm
Date: 2014, Revised 2014
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Persistent link: https://EconPapers.repec.org/RePEc:rcr:wpaper:03_14

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