Lexicographic preferences for rural environmental landscape improvements: implications on individual-specific willingness to pay estimates

Danny Campbell (), George Hutchinson and Riccardo Scarpa
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George Hutchinson: Institute of Agri-Food and Land Use, Queen’s University Belfast

No 610, Working Papers from Rural Economy and Development Programme,Teagasc

Abstract: In discrete choice experiments respondents are generally assumed to consider all of the attributes across each of the alternatives, and to choose their most preferred. However, results in this paper indicate that for many respondents employ simplified lexicographic decisionmaking rules, whereby they have a ranking of the attributes, but their choice of an alternative is based solely on the level of their most important attribute(s). Not accounting for these simple decision-making heuristics introduces systemic errors and leads to biased point estimates, as they are a violation of the continuity axiom and a departure from the use of compensatory decision-making. In this paper the implications of lexicographic preferences is studied for a number of rural environmental landscape improvement measures. Differently from previous analysis, this paper uses a mixed logit specification and focuses on the sensitivity of individual-specific willingness to pay estimates conditional on whether lexicographic decision-making rules are accounted for in the modelling of discrete choice responses.

Pages: 33 pages
Date: 2006
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Related works:
Working Paper: Lexicographic Preferences in Discrete Choice Experiments: Consequences on Individual-Specific Willingness to Pay Estimates (2006)
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