Search

Objectives: Decisions about health often involve risk, and different decision makers interpret and value risk information differently. Furthermore, an individual's attitude toward health-specific risks can contribute to variation in health preferences and behavior. This study aimed to determine whether and how health-risk attitude and heterogeneity of health preferences are related. Methods: To study the association between health-risk attitude and preference heterogeneity, we selected 3 discrete choice experiment case studies in the health domain that included risk attributes and accounted for preference heterogeneity. Health-risk attitude was measured using the 13-item Health-Risk Attitude Scale (HRAS-13). We analyzed 2 types of heterogeneity via panel latent class analyses, namely, how health-risk attitude relates to (1) stochastic class allocation and (2) systematic preference heterogeneity. Results: Our study did not find evidence that health-risk attitude as measured by the HRAS-13 distinguishes people between classes. Nevertheless, we did find evidence that the HRAS-13 can distinguish people's preferences for risk attributes within classes. This phenomenon was more pronounced in the patient samples than in the general population sample. Moreover, we found that numeracy and health literacy did distinguish people between classes. Conclusions: Modeling health-risk attitude as an individual characteristic underlying preference heterogeneity has the potential to improve model fit and model interpretations. Nevertheless, the results of this study highlight the need for further research into the association between health-risk attitude and preference heterogeneity beyond class membership, a different measure of health-risk attitude, and the communication of risks.

Objective This study aims to determine how population-based health-utility score (HUS) differences reflect individuals’ health preferences using responses from the Canadian EQ-5D-5L Valuation Study, including time trade-off (TTO) and discrete-choice experiment (DCE) tasks (n=1073). Study Design and Setting Cardinal TTO responses were transformed into pairwise comparisons to yield ordinal TTO responses. We investigated how EQ-5D-5L HUS differences differ from participants’ stated cardinal preferences, and determined the smallest HUS difference that may be expected to represent participants’ ordinal preferences. Results HUS differences near 0 have 30.6% (95% confidence interval: 29.1 to 31.9%) probability of representing a tie in individuals’ TTO values. Differences in EQ-5D-5L HUS of -0.054 (-0.071 to -0.029) and 0.047 (0.026 to 0.076) maximized the sensitivity and specificity of discriminating transitions to worse/better health states. For small HUS differences of +/-0.03 to +/-0.07, the magnitude of respondents’ average TTO difference on the cardinal scale was 0.17 and 0.35 whether ties were included or excluded, respectively. Absolute HUS differences between 0.043 and 0.064 had a 50% probability of representing respondents’ ordinal preferences. Conclusion A HUS needs to be large enough to reflect individuals’ stated health preferences, which may lend support to the application of a minimally important difference for decision-making.

Objectives Amid a pandemic, vaccines represent a promising solution for mitigating public health and economic crises, and an improved understanding of individuals’ vaccination intentions is crucial to design optimal immunization campaigns. This study predicts uptake rates for different COVID-19 vaccine specifications and identifies personal characteristics that moderate an individual’s responsiveness to vaccine attributes. Methods We developed an online survey with contingent specifications of a COVID-19 vaccine, varying in effectiveness, risks of side effects, duration of immunity, and out-of-pocket cost. Using population-averaged logit models, we estimated vaccine uptake rates that account for uncertainty, heterogeneity across respondents, and interactions between vaccine and personal characteristics. Results We obtained 3047 completed surveys. The highest uptake rate for an annual vaccine, 62%, is predicted when vaccine effectiveness is 80% to 90%, side effects are minimal, and the vaccine is provided at zero cost, with decreases seen in the uptake rate for less effective vaccines, for example, 50% for 50% to 60% effectiveness. Moreover, we found that Americans’ response to vaccine effectiveness depends on their self-reported concern, that is, concerned respondents report a higher willingness to get vaccinated. Our findings also indicate that COVID-19 vaccine uptake rates decrease with vaccine cost and that responsiveness to vaccine cost is moderated by income. Conclusions Although providing the COVID-19 vaccine at zero cost will motivate many individuals to get vaccinated, a policy focused exclusively on vaccine cost may not be enough to reach herd immunity thresholds. Although those concerned with COVID-19 will participate, further evidence is needed on how to incentivize participation among the unconcerned (43%) to prevent further pandemic spread.

The past decade has seen the introduction and widespread availability of a number of new mobility services. These have created a transport environment that is complex to navigate for passengers. The Mobility as a Service (MaaS) concept aims to provide a solution, by offering a single digital interface through which users can plan journeys, pay for and access a variety of transport modes. MaaS can also provide users with various products, including pay-per-use access to transport modes as well as MaaS packages. The latter are bundled mobility services that combine a variety of transport modes and are offered to customers in a one-stop-shop manner. The objective of this paper is to examine individual preferences for MaaS packages, specifically addressing the question of preference heterogeneity. In doing so, a Latent Class Choice Model (LCCM) is developed, allowing us to reveal variations in individuals’ preferences. The LCCM is estimated using data from a MaaS-related market research carried out in Greater Manchester. The results imply significant heterogeneity with regards to preferences. Three latent classes emerged through the analysis, all with different MaaS package preferences and individual characteristics. Age, gender, income, education and current travel behaviour all play an important role in determining an individual’s propensity to purchase MaaS packages. The results can provide valuable insights into the types of people that should and should not be initially targeted with MaaS packages to maximise uptake.

Membership-based short-term car rental–more popularly referred to in the marketplace and popular media as “car-sharing”–has been expanding rapidly worldwide. The advent of self-driving vehicles is likely to facilitate the growth of car-sharing by addressing a couple of the current barriers, including limited dedicated parking and non-competitive access times. Despite the growing importance of this topic, however, the patterns emerging in the market penetration of automated vehicles in car-sharing programs have not received much attention in the literature because of the relative newness of the automated vehicle technologies enabling them. Towards addressing this research gap in this increasingly important area, this paper presents the results of an Australian survey with a focus on consumer preferences towards car-sharing. A stated preference (SP) methodology was adopted to elicit consumers’ valuation of specified mode-choice related factors. In particular, vehicle self-driving capability, a factor rarely examined in the literature, was provided as an option to participants in the SP survey. To increase the realness of the experiment, SP tasks were pivoted from respondents’ most recent trips. The travel preferences data were analyzed using a random parameter (mixed) logit model. To explore preference heterogeneity, socio-demographic and other factors were interacted with alternative-specific attributes, and their influences on marginal utilities were extracted using simulation analysis. Preference heterogeneity across individuals towards shared automated vehicles (SAVs) was identified. Consistent with the literature, consumers’ experience of using car-sharing appears to have significant influence on household mode choices, increasing the probability of using a diversified mode tools (e.g., TWS and Taxi) and decreasing the likelihood of choosing to use privately owned travel tools, such as private car. Although it has been argued in the literature that females, non-drivers, and the elderly are the most likely to benefit from SAVs, the results of this study reveal that these user groups in fact hold negative opinions about SAVs. The findings highlight the challenges policymakers may encounter in maximizing the social and individual benefits of SAVs.

Limited information is provided on the potential impacts of ingredients in consumer products to assist individuals to purchase household products. This study applied the choice experiment technique to examine the preferences of 385 New Zealand households on their purchasing choice of liquid soap for handwashing. Results from the choice experiment survey, conducted in December 2016 to March 2017, indicated that a typical respondent from the full sample would be willing to pay premium prices for a bottle of liquid soap that is certified to be environmentally friendly (NZ$3.20), hypo-allergenic (NZ$2.90), contains natural ingredients (NZ$2.10), and has antibacterial properties (NZ$1.40). However, by dividing the full sample into four latent classes, a typical respondent in one class would pay NZ$1.88 to avoid the antibacterial activity. This study highlights the importance of accounting for preference heterogeneity across latent classes or respondent sub-groups to better understand preferences and awareness of ingredients in liquid soaps, such as antibacterial chemicals, that can pose environmental and health risks.

We model consumer switching in retail electricity markets in New Zealand to identify important determinants of switching and estimate willingness to pay (WTP) for six non-price attributes of electricity services, namely, call waiting time, length of fixed rate contract, renewable energy, loyalty rewards, supplier ownership, and supplier type. The results provide important insights into residential consumer switching, which inform policy and enable suppliers to differentiate their products. The analysis is based on 2688 choice responses generated using an online choice experiment administered to a sample of 224 residential bill-payers. A latent class model is used to distinguish important determinants of switching and preference heterogeneity. We find that non-price attributes of electricity services are significant determinants of consumer switching. Three latent classes with distinct preferences for the attributes are identified. The first class (40%) is mainly concerned about power bills and would switch supplier to save at least NZ$125 per year in power bills, ceteris paribus. This value mainly captures the status quo effect or preference for incumbent traditional suppliers. The second class (46%) exhibits no status quo preference, values all attributes, and particularly dislikes entrants from other sectors. These suppliers must charge NZ$135 per year less than traditional suppliers for a 50% chance of attracting customers. The third class (14%) consists of captive and loyal customers who are unlikely to switch supplier for any realistic power bill savings.

This paper explores the role of unobserved heterogeneity using different approaches: mixed, scaled and the generalized mixed logit model, and the latent class model, applied to wine choice. Results show that preference heterogeneity appears to be more relevant than scale heterogeneity, and the model accounting for both performs best. This finding suggests that wine choice is complex, demanding a higher cognitive burden, which may lead to the use of simplification strategies when choosing. For the purpose of wine valuation, the latent class model gives useful insights for market segmentation.

There has been an increasing interest in studying patient preference heterogeneity to support regulatory decision-making. While the traditional mixed logit (MXL) and the latent class logit (LCL) models have been commonly used to analyze preference heterogeneity in discrete choice data, they have limitations. This study empirically compares a random effects latent class logit (RELCL) model to the traditional approaches using preference data from a discrete-choice experiment among patients with Type 2 diabetes. Each survey contained 18 pairs of hypothetical diabetes medications that differed in six attributes. Sensitivity analysis is also performed to explore under what circumstances RELCL outperforms LCL. Significant preference heterogeneity was found in all models. The 2-class RELCL has the lowest BIC (8350.64) and prediction error (11.6%) compared to MXL (BIC = 9345.40; pred. err. = 13.0%) and the 5-class LCL (BIC = 8440.30; pred. err. = 16.4%), indicating improved model fit. Allowing random effects also reduces the number of classes from five in LCL to two, both having significant policy and clinical implications. RELCL provides the flexibility of LCL and the parsimony of MXL. Both our empirical results and sensitivity analysis shows that when there is significant preference heterogeneity among patients that cannot be captured by a small number of clusters, RELCL may be used to generate more accurate predictions and more parsimonious results that are policy-relevant.

There is substantial variation in individual preferences for public goods, yet much of that variation remains poorly understood. However, simple measures of personality can help to explain economic values and choices in a systematic way. In this paper, we examine the effects of personality on individual economic choices over public environmental goods. Based on three datasets from three separate stated preference studies, we use a hybrid choice econometric framework to examine the effects of personality on preferences for the status quo, changes in environmental quality, and costs of investing in environmental improvements. We find effects that are consistent across all datasets. Personality, a stable feature of an individual's character that is simple to measure, enriches explanations of why the demand for environmental goods varies across people, provides an indication of how different people are likely to react to the introduction of environmental policies, and explains substantial differences in Willingness to Pay.

This research shows that brand popularity as an advertising cue positively affects purchase intention in the context of tourist shopping. More importantly, it reveals that the effects of two popularity cues (destination-popularity cue vs. tourist-popularity cue) on tourist shoppers’ brand choice can be different according to product characteristics and situational factors. When product involvement, preference heterogeneity and time pressure are high, tourist shoppers tend to choose a brand with a tourist-popularity cue rather than one with a destination-popularity cue. Unexpectedly, however, the effects of the two popularity cues on brand choice are not influenced by tourist shoppers’ involvement with gift recipients in the context of buying a souvenir as gift for others.

We analyze structural state dependence in brand choice using variation from brand switching during stock-outs caused by hurricanes. We derive a simple test for structural state dependence based on the time-series of choice persistence for households affected by the stock-outs that requires fewer assumptions than most previous work. Using data from the bottled water category, we show that demand increases substantially around hurricane events and causes households to purchase different brands. We find that purchase behavior reverts back to its pre-hurricane trajectory immediately after the hurricane and we are not able to reject the null hypothesis of no structural state dependence. We show that our results are not driven by unusual purchases during the hurricane or context-specific purchase behavior.

This paper explores how heterogeneity in life expectancy, objective (statistical) as well as subjective, affects savings behavior between healthy and unhealthy people. Using data from the Health and Retirement Study, we show that people in poor health not only have shorter actual lifespan, but are also more pessimistic about their remaining time of life. Using a standard overlapping-generations model, we show that differences in life expectancy can explain one third of the differences in accumulated wealth with an important part driven by pessimism among unhealthy people.

The hedonic pricing method has been used extensively to obtain implicit prices for availability of urban green space, but few have obtained households' preference parameters. We elicit preferences and estimate willingness to pay functions for park availability in Copenhagen using an approach that places identifying restrictions on the utility function. We do this for two different measures of park availability and examine sources of preference heterogeneity. We find that the implicit price of another hectare of park within a 1000 m radius is 53.25 EUR per ha per year for the average apartment corresponding to an increase in annual rent of 0.33% per additional ha. For reducing distance to the nearest park by a meter, the price is 0.59 EUR per meter per year, corresponding to an increase in annual rent of 0.03‰ per meter. We apply our results to a policy scenario reducing the park area available in an area of central Copenhagen and show how estimates of aggregate welfare changes are highly sensitive to the measure of park availability applied. The findings stress the importance of paying attention to how public goods are defined when undertaking welfare economic policy analyses.

The present study reports an investigation on the effects of socioeconomic and trip characteristics of metro commuters on their perceived importance towards transfer facility attributes with reference to Kolkata city in India. A five-point Likert-type ordinal scale rating survey was designed to collect responses along with socioeconomic and trip characteristics by intercepting metro commuters. The database was analysed using Mann-Whitney U test and Wilcoxon W test to investigate the effects of socioeconomic and trip characteristic of commuters on their perceived importance towards transfer facility attributes. Relative to an Identified Distribution Integral Transformation (RIDIT) analysis was performed to derive the rankings of transfer facility attributes as perceived by different commuter groups based on ‘trip rate’, ‘gender’, and ‘car ownership’. Heterogeneity found in perceived importance and derived rankings of transfer facility attributes with respect to the ‘trip rate’ of the metro commuters, and between ‘captive riders’ and ‘choice riders’ while no such variation is observed between ‘male’ and ‘female’ commuters. The findings of the present study will primarily help the policy makers and facilities planners to formulate improvement strategies for transfer facilities at metro stations giving due consideration to the requirements of different commuter groups based on their socioeconomic and trip characteristics.

A semi-parametric logit-mixed logit (LML) model to specify the mixing distribution of the preference heterogeneity is the recent advancement in logit-type models. LML provides a general specification for many previous semi-parametric and non-parametric models. Additionally, a special form of the likelihood gradient makes LML computationally more efficient than other parametric models. However, the original LML formulation assumes all utility parameters to be random. This study extends LML to a combination of fixed and random parameters (LML-FR) and motivates such combination in random parameter choice models in general. We further show that the likelihood of LML-FR specification looses its special properties, leading to a much higher estimation time than that of the original LML specification. In an empirical application about preferences for alternative fuel vehicles in China, estimation time increased by a factor of 15-20 when introducing fixed parameters to the LML model. The comparison of the original LML and LML-FR specifications with other parametric models indicate that LML-FR model outperforms these parametric models in terms of model-fit-criteria (e.g., AIC, BIC, and likelihood), but the same does not hold for the original LML, i.e. when all parameters are assumed random.

Cross-domain collaborative filtering has attracted a great deal of attention for its capability of dealing with data sparsity by transferring valuable knowledge from auxiliary domains to assist in recommendation in a target domain. State-of-the-art research has mainly focused on the scenario in which auxiliary domains share users or items with a target domain. However, such auxiliary data is rare or the acquisition of them is limited due to privacy concerns in real-world applications. We investigate a more realistic scenario in which auxiliary domains have neither users nor items overlapped with a target domain, thereby facilitating the collection of auxiliary data. In order to extract and transfer the sharing knowledge between auxiliary domains and target domain, we assume the user-item feedback in each domain consist of two parts: domain-transferrable information containing the shared knowledge and domain-reserved information reflecting the domain-specific characteristics. Correspondingly, we propose a mixed heterogeneous factorization model to capture the sharing knowledge and the domain-specific characteristics based on adapted tensor factorization and biased matrix factorization respectively and then combine them together in an accumulative way. Meanwhile, three types of domain heterogeneity including preference heterogeneity, characteristics heterogeneity and rating bias are taken into account in this model. Experimenting on four publicly available datasets across different domains, we show that our model is superior to state-of-the-art methods in rating prediction and top-N recommendation tasks.

This study examines the extent to which heterogeneous perceptions and opinions toward water resource policy influence recreational demand in a river basin, and the associated valuation of ecosystem services. We first employed a latent class analysis to reveal two distinct groups of respondents that differ in their perceptions and opinions despite similar demographic characteristics. We then estimated a recreational demand model that is conditional on latent class membership. We found that respondents’ perceptions and opinions directly influence recreational demand and valuation. Incorporating preference heterogeneity using latent class analysis, in addition to or instead of demographic characteristics, could help improve estimates of the distributional impacts of a policy designed to enhance ecosystem services.

The neglect of wildlife in grassland ecosystem conservation may lead to severe ecological consequences. Humans use more than 99% of the natural grassland in China, but local herders' attitude and willingness to pay for wildlife conservation in grassland ecological restoration have not been studied. This study evaluated local herders' preferences and willingness to pay for increasing the wildlife population in grassland ecosystem conservation through a choice experiment in Siziwang Banner and Damao Banner of Inner Mongolia, China. The results show that herders have a positive preference for improving vegetation coverage, grassland landscape, and groundwater level, but they are averse to the growth of the wildlife population, and their preferences toward the issue are heterogeneous. The sources of heterogeneity include the gender of the respondents, whether they are village cadres, whether their families raise sheep, whether they are preparing for migration and family size. Sheep farmers, female respondents, non-village cadres, smaller families, and those preparing for migration are more opposed to the increase in wildlife population than the other groups. An increase in wildlife will cause welfare loss among herders. Specifically, the average marginal willingness to pay for the rise in the frequency of wildlife sightings is −21.57 CNY (1 USD = 6.7744 CNY) per year, and the total welfare loss of herder households in the study area is 1.22 million CNY per year due to each unit increase in the frequency of wildlife sightings. We suggest that herders' support for wildlife conservation should be gained through education and ecological compensation to avoid unexpected grassland ecological consequences. Our results are applicable globally because most natural grasslands are under human use, and the conflict between wildlife and humans has been observed globally.

Residents' willingness to pay (WTP) for ecosystem services plays a key role in improving the functions of ecosystems. Previous studies have mainly focused on the differences in residents' WTP in the upper, middle, and lower reaches of river basins. However, the relationship between the vertical distance to river basins and residents' WTP for ecosystem services remains unclear. We conduct a questionnaire survey using a sample of 755 people from 32 villages in the Xijiang River Basin (XJRB), an important water system in China. The influence of the vertical distance to the XJRB on residents' WTP for ecosystem services is analyzed by using a multinomial logit model and latent class model. The key findings are as follows: (1) Residents' WTP for ecosystem services is significantly different with different distances to the XJRB. Respondents within a distance of 3 km to the XJRB have a stronger WTP. (2) The spatial heterogeneity of the influences of distance to the XJRB is well verified, and classifies residents into different latent groups. (3) Comparing WTP at the vertical distance level and horizontal level in the XJRB shows that residents have stronger overall preferences and latent group preferences at the vertical distance level. These findings contribute to our understanding of the relationship between spatial distance to the river basin and residents' WTP for ecosystem services, which should be useful in implementing differentiated river ecosystem service restoration policy.

Despite its essential role in the delivery of ecosystem services, forest soil biodiversity experiences pressures, especially of anthropogenic origin. Forest management can harm or support soil biodiversity, depending on the management decisions taken, but currently generally overlooks soils. Management decisions considerably depend on public opinion, that often conflicts with foresters' viewpoint and differs from what is ecologically optimal. Moreover, public opinion is mostly ignorant of soil biodiversity, creating opportunities for information to strengthen consideration of soil biodiversity amongst citizens. Therefore, this study assesses public preferences for forest management affecting soil biodiversity, and investigates the effect of an information treatment related to soil biodiversity on these preferences. For this purpose, we conducted a discrete choice experiment with a representative sample of 299 Flemish citizens, including an information treatment in a within subjects study design. Results showed that the information treatment significantly increased preferences for higher shares of old trees and dead wood, tree species mixing and tree logging through fixed logging roads, which support soil biodiversity. Heterogeneity in preferences was found but decreased after the information treatment. Specifically, 67% of the respondents focused on aesthetics and recreation before the information treatment, while their preferences for biodiversity components, tree logging and regulating ecosystem services considerably increased after the information treatment. Providing information is expected to increase preferences of these individuals most, who generally were less familiar with forests and soil biodiversity. On the other hand, familiar individuals more knowledgeable of soil biodiversity disclosed preferences that encouraged a wider set of forest management in-tensities. Policy makers can use this information to increase valuation of soil biodiversity by citizens regarding their forest management preferences. Eventually, this can help to achieve public acceptance of management choices that support soil biodiversity and foster adoption of such choices amongst foresters. (C) 2021 Elsevier B.V. All rights reserved.

China is currently the world's biggest electric vehicle (EV) market, in which mostly mature consumers in first-tier cities are buying EVs. However, the changing market and policy environment are challenging the sustainability of this trend. This study conducts a nationwide stated preference (SP) experiment in China to examine preference heterogeneity towards EVs across (1) different generations and (2) different tiers of cities. Discrete choice analysis reveals that the tier of cities has a significant effect on adoption preferences for EVs. Surprisingly, consumers in smaller cities exhibit stronger preference for EVs, while an insignificant difference in preference is found between consumers of different generations. The interaction effect between the tier of cities and the generations further demonstrates that younger consumers in small cities most prefer EVs. This can be explained by their evaluations of the psychosocial advantages of EVs and their aspiration for a future of EV-based mobility. This research contributes to the broad literature of technology adoption, but more specifically, the research offers new insights on consumers’ EV preference heterogeneity with respect to geographic and demographic dimensions. The study has important business and policy implications relating to the EV transition in China in consideration of the two tested dimensions.

Payment for Ecosystem Services (PES) approaches can potentially be used to protect and enhance the provision of ecosystem services. However, there is a need to assess the costs and effectiveness of such voluntary schemes. In particular there is a need for PES schemes to enhance climate regulating services in agricultural systems. In this paper we combine a choice experiment with a marginal abatement cost approach to determine the heterogeneity in cost-effectiveness of sequestration policy schemes in the UK farming sector. The results in general suggest that farmers show an aversion to drastic changes in land management activities but they can be encouraged to adopt relatively less restrictive activities through appropriate compensations. The results indicate that agricultural schemes can deliver carbon abatement at costs comparable to the official UK carbon price. This suggests that carbon sequestration in soils through land use changes and alternative land use management should be considered in UK policy developments to achieve carbon mitigation targets.

This paper investigates the step tolling problem in an activity-based bottleneck model in which activity scheduling utilities of commuters at home and at work vary by the time of day. The commuters choose their departure times from home to work in the morning to maximize their own scheduling utility. Step tolling models with homogeneous and heterogeneous preferences are presented. The properties of the models and the optimal step toll schemes with constant and linear time-varying marginal activity utilities are analytically explored and compared. It was found that for a given number of toll steps the efficacy of a step toll in terms of queuing removal rate is higher in the activity-based bottleneck model with linear marginal utilities than in the conventional bottleneck model with constant marginal utilities, and ignoring the preference heterogeneity of commuters would underestimate the efficacy of a step toll.

Because edible insects provide nutritional and environmental benefits, there is a focus on establishing and optimizing the insect production sector and developing the value chain. However, little is known about consumers’ reactions to insects as food. This paper provides a first insight into consumers’ preferences for termite-based food products (TBFPs) using data from a choice experiment survey in Kenya. A novel feature of this paper is that it investigates the combined effects of product-related and contextual attributes, as well as consumer attitudes on preferences for TBFPs. In addition, the paper focuses on the extent to which preferences may be affected depending on the meal formats, i.e. whether the termites are introduced either as whole insects or as a processed component in a typical daily meal. The results suggest that consumers prefer TBFPs with high nutritional value and especially when they are recommended by officials. Results further indicate that affirmative recommendations are particularly important for the processed TBFP, and consumers prefer to buy this type of product in kiosks or supermarkets than at local marketplaces. Despite a considerable degree of preference heterogeneity, most consumers react positively to whole as well as processed termites. Therefore, the introduction of TBFPs is likely to succeed regardless of whether the termites are processed or not, although introducing the processed product may require further information and quality assurances to alleviate perceived food risks.

Holdings of money and illiquid assets are likely to be determined jointly. Therefore, frictions that give rise to a need for money may affect capital formation, resulting in either too much or too little investment. Existing models of money and capital however tend to overlook that both types of investment inefficiencies can be equilibrium outcomes. Building upon insights from the New-Monetarist literature, we construct a model in which preference heterogeneity between agents implies that both over- and under-investment can arise. We use our framework to study whether monetary policy can effectively resolve both types of investment inefficiencies, and find that increasing inflation could resolve under-investment inefficiencies while reducing inflation could curb over-investment inefficiencies.

This paper develops a revealed preference method to set-identify the degree of price inattention at the individual level, in a non-experimental, multi-good setting. Necessary and sufficient conditions for consistency with a particular type of price inattention are derived, and used to recover individual-specific sets from household scanner data. This price inattention model significantly outperforms its standard counterpart for most specifications of price inattention considered. The minimum and maximum degrees of inattention are generally small, but vary considerably across households and have significant correlations with household characteristics. These results provide further evidence that heterogeneity in price inattention is empirically important.

Platform-based systems have become the dominant way to market consumer entertainment products. Video games are, for instance, distributed in digital data form, which can only be used on compatible hardware. Network effects drive the diffusion of such systems. This article provides insights into market heterogeneity and the role that expectations of the direct and indirect network effects plays in the game console market. The results of two empirical studies suggest that the console market is strongly fragmented and that the perceptions of network effects differ between the various target segments. The same holds for the importance of consumer expectations: For instance, hardcore gamers make predictions about the future software availability and incorporate these into their current adoption decision, while social gamers care more about the expected potential to interact with others. When introducing novel technologies, platform sponsors can benefit from improved targeting by, for example, providing software selectively, instead of large varieties early on. This study identifies the limits of go-to-market strategies derived from aggregate analyses when dealing with network effects and shows that behavioristic insights should complement them.

Reflecting the growing interest from both consumers and policymakers, and building on recent developments in Willingness to Pay (WTP) methodologies, we evaluate consumer preferences for an archetypal traditional food product. Specifically we draw on stated preference data from a discrete choice experiment, considering the traditional Hungarian mangalitza salami. A WTP space specification of the generalized multinomial logit model is employed, which accounts for not only heterogeneity in preferences but also differences in the scale of the idiosyncratic error term. Results indicate that traditional food products can command a substantial premium, albeit contingent on effective quality certification, authentic product composition and effective choice of retail outlet. Promising consumer segments and policy implications are identified. (authors' abstract)

This paper studies the wealth and pricing implications of loss aversion in the presence of arbitrageurs with Epstein–Zin preferences. Loss aversion affects an investor's survival prospects mainly through its effect on the investor's portfolio holdings. Loss-averse investors will be driven out of the market and do not affect long-run prices if their portfolio positions are further away from those corresponding to the log investor than arbitrageurs. In terms of wealth shares, the market selection process can be slow, but the selection force is nonetheless effective in terms of price impact, which highlights the importance of introducing preference heterogeneity in understanding asset prices.

Empirical evidence across several electricity markets reveals heterogeneous customer preferences for direct load control and other electricity service offerings but relatively little is understood concerning the drivers of this preference heterogeneity. Using a discrete choice experiment examining the potential role of domestic appliance curtailment contracts as a means of shifting load, this paper investigates potential drivers of preference heterogeneity with respect to electricity services. The research finds that electricity customers’ personal characteristics, including their environmental attitudes and behaviours, are associated with preferences for curtailment contract attributes though the scale of the relationship is more nuanced and muted than might have been anticipated. Age, family size, and environmental attitudes are the respondent characteristics with the strongest association with preferences, though the nature of the association varies substantially across attributes.

We document that within-individual variation in food choices is substantial and has potentially important consequences for nutrition, and hence well-being. We develop an approach that allows us to study the determinants of this within-individual variation within an economic framework and allow for across-individual preference heterogeneity. We show that around one-fifth of within-individual fluctuations in diet quality is explained by standard economic variables (prices and budgets), along with advertising and weather. The residual fluctuations are important and are larger for lower income and younger people, and individuals who state they are impulsive. We propose a two-selves model of food purchase behavior to structurally interpret these empirical patterns. We use nonparametric revealed preference techniques to show that this model rationalizes our food purchase data., SCOPUS: ar.j, info:eu-repo/semantics/published

Political coordination and policy outcomes may be the result not only of the position of the ‘median voter’ in a political scale but also of the heterogeneity of preferences around the median. Depending on the level of government and the type of policy, such heterogeneity may lead to lower public spending and redistribution. We assess this issue empirically by analyzing the relationship between the distribution of preferences for redistribution and the amount of public expenditure at different levels of government and for several types of spending in 23 European countries. Our results suggest a negative and significant correlation between heterogeneity of preferences for redistribution and public spending that is stronger at the local level and for redistributive functions, independent of the median individual's preferences.

Driver’s disturbance risk preference is defined as the driver’s reaction degree to the disturbance, which is a kind of the driver’s attributes and can be expressed by the disturbance risk preference coefficient. This paper proposes a new car-following model and firstly attempts to analytically investigate the combined effects of drivers’ disturbance risk preference heterogeneity and the nearest following vehicle headway on traffic flow instability under some specific traffic scenarios. Solution of the model yields many insights including the following: (1) when drivers’ disturbance risk preference increases from the following driver to the preceding driver, traffic flow instability increases, and the bigger the disturbance risk preference coefficient ratio of the preceding driver’s coefficient to the following driver’s coefficient, the bigger the increasing effect and vice versa; at this scenario, the nearest following vehicle headway increases traffic flow instability; (2) when drivers’ disturbance risk preference is homogeneous, drivers’ disturbance risk preference and the nearest following vehicle headway have no effects on traffic flow instability; (3) when drivers’ disturbance risk preference reduces from the following driver to the preceding driver, for the general traffic situation, traffic flow instability reduces, and the smaller the disturbance risk preference coefficient ratio of the preceding driver’s coefficient to the following driver’s coefficient, the bigger the reducing effect and vice versa; at this scenario, if the coefficient ratio reduces from the following to the preceding or is homogeneous, the nearest following vehicle headway increases traffic flow instability, otherwise, the effects of the nearest following vehicle headway on traffic flow instability cannot be confirmed.

Examining bicyclists' route choices provides valuable insights into the importance of road environments for bicycling. In this study, we examine the role of road factors, individual factors, and preference heterogeneity on route choice using two diverse and extreme cases in the U.S. The first case is bicycling to the University of California, Davis campus by students, faculty, and staff. This case represents the most bike friendly environment in the U.S. which affords a diverse bicycling population. The second case is bicycling to many destinations for many purposes in San Francisco, CA. It is more representative of a large U.S. city, but also has a relatively large bicycling mode share. It serves as an important case for examining the new innovative type of bicycling infrastructure that has been installed in North American cities over the past decade. Results suggest substantial within-city between-person heterogeneity in preference for road attributes and bicycling facilities as well as differences between contexts. Davisites show strong preferences for bike lanes and off-street paths and consistently choose routes of similar length to shortest routes indicating the need for suitable routes with minimal detours to support a large bicycling mode share. San Franciscans show strong preferences for conventional bike lanes on minor arterials, even stronger preferences for separated and protected bicycling facilities, and are willing to detour considerable distances to ride on them. Given large between-person differences within cities, we suggest usual valuations of bicycling facilities from elasticities and marginal rates of substitutions at the mean may need rethinking when applied to bike infrastructure planning.

We provide an explanation for product versioning that is not driven by differential costs or consumer preference heterogeneity, and investigate its implications. Consumers care whether a product they own is better than that owned by others, and whether others own a better product than them. These positional effects can induce a firm to offer products of different quality, with the high quality product becoming more exclusive as these effects strengthen. Consumers with no positional preferences become worse off when the broader market acquires them, except following the introduction of the second product, when some such consumers become better off. Positional preference also reduce total consumer surplus holding the number of products fixed; however, they increase consumer surplus if they lead the firm to introduce a second product of sufficiently high quality. We discuss empirical implications of the theory.

We show that the introduction of a non-contributory pension program (Pension 65) in Peru had remarkably different effects for its three main ethnic groups, i.e., Mestizo, Quechua, and Aymara. The Aymara beneficiaries of the program have experienced larger increases in health and life satisfaction compared to other Peruvians. Using a panel life satisfaction regression, we find evidence for preference heterogeneity between the Aymara and the other ethnic groups that is consistent with the observed differences. Finally, we turn to the question of how the pension program can be evaluated in a robust manner while respecting the preference heterogeneity between the ethnic groups. We propose the natural criterion that a program benefits a recipient if she is lifted to a higher indifference curve. We show that the pension program was beneficial for all groups, but that more Aymara beneficiaries were lifted to a higher indifference curve compared to other Peruvians. Our proposed criterion can be useful to evaluate programs in all cases where preference differences matter.

Using data from four previous experiments, I examine the relationship between contribution heterogeneity and the changes in average contributions that occur from round to round. Specifically, I develop and test the hypothesis that when there is greater contribution heterogeneity in a particular round, average contributions will decrease more between the current round and the next round, all else being equal. I find strong support for my hypothesis with partner and stranger matching, and with and without belief elicitation about the average contributions of others. When beliefs are elicited, changes in average contributions tend to be positively associated with changes in average beliefs, but the relationship is not as strong as the one between changes in average contributions and contribution heterogeneity. In order to determine the driving force underlying the empirical relationship between contribution heterogeneity and changes in average contributions, I simulate contributions under different counterfactual assumptions about belief heterogeneity and contribution preference heterogeneity using one of the data sets. I compare the simulation models in terms of how well each matches the data. The simulations indicate that contribution preference heterogeneity is a stronger factor underlying the dynamics of contributions than belief heterogeneity.

Time and risk preferences are known to vary considerably across individuals but less is known about the determinants of these individual differences. This paper examines whether preferences vary by geographical location. The motivation for examining geographic heterogeneity is the higher level of mortality experienced in Glasgow over and above that explained by deprivation, sometimes referred to as the 'Glasgow effect'. Data were collected from 3702 individuals across Glasgow, Manchester and Liverpool between July and November 2011. The results show evidence of geographic preference heterogeneity. Contrary to our hypothesis, individuals in Glasgow have a lower rather than higher time preference rate. Individuals in Glasgow are on average more risk seeking compared to Liverpool and more likely to be at the tail end of the distribution (very risk seeking) compared to Manchester. Differences in risk preferences may help explain some of the differences in mortality associated with risky health behaviours such as drug and alcohol use. However, individuals in Glasgow were also more future oriented suggesting that they are less likely to engage in risky healthy behaviours. As the differences in time and risk preferences work in opposite directions in terms of health investments it less likely that these differences can help explain excess mortality in Glasgow.

This paper examines the impact of social heterogeneity on in-kind redistribution. We contribute to the previous literature in two ways: we consider (i) the provision of several public goods and (ii) agents different not only in income, but also in their preferences over the various goods provided by the public sector. In this setting, both the distribution and size of goods provision depend on the heterogeneity of preferences. Our main result is that preference heterogeneity tends to decrease in-kind redistribution, while income inequality tends to increase it. An empirical investigation based on United States Census Bureau data confirms these theoretical findings.

The prominent but unproven intuition that preference heterogeneity reduces redistribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance, with income. Given familiar functional form assumptions on utility and the distributions of ability and preferences, a simple statistic for the effect of preference heterogeneity on marginal tax rates is derived. Numerical simulations and suggestive empirical evidence demonstrate the link between this potentially measurable statistic and the quantitative implications of preference heterogeneity for policy.

This study examines the heterogeneous consumer preference for electricity products in the residential electricity retailing market. Based on consumers’ trade-off decision making, we identified three distinct consumer segments: the value seeking consumers (53%), the price sensitive consumers (25%), and the green consumers (22%). We concluded that consumers are willing to pay extra for the increasing share of renewable energy. Consumer socio-demographic characteristics had also influence on their choices for electricity products. The findings of this study can help explain how different consumer segment can be affected by the change of electricity product attributes. Thus, it provides insightful knowledge on how to differentiate electricity products so as to satisfy specific consumer segments’ needs. Finally, the findings of this study have implications for energy policy makers (regulators) on consumers’ preference for electricity products assuming that consumers should make a choice among various products.

We present a test of antecedent volition under conditions of varying choice complexity. Using a stated preference design, decision makers make hypothetical transport choices under three decision scenarios. The choices are made under conditions of three, five, and seven alternatives per choice set. Further, we analyze the data from these three experiments simultaneously using factor-analytic structural choice models. We fit these models because they allow us to specify a latent structure representing a behavioral process of antecedent volition. Past research emphasizes differences in aggregate preferences due to context effects, but is incomplete in some important respects. Model parameters of the most theoretically appealing specification include estimates of means (i.e., aggregate preferences for the attributes studied) and regression coefficients for the effects of latent variables on the taste sensitivities common to the decision scenarios (i.e., structure of preferences in relation to the attributes). Extending past research, we find evidence of latent variables and structures that are common to the taste sensitivities of specific attributes across the decision scenarios (i.e., sources of preference heterogeneity and a structure to the heterogeneity). This pattern of results is suggestive of a behavioral process consistent with literature and theory on antecedent volition. Our model forms and results have implications for policymakers and researchers. They are especially salient to recent literature contrasting context effects with the notion of stable and inherent preferences.

This paper examines whether water quality has an effect on recreational boating activity. The analysis is based on survey data collected by face-to-face interviews with recreational visitors to 10 waterway sites across Ireland. We model the respondent's choice decision to travel to a specific site for the purposes of beginning their recreational boating activity. Water quality data is from European Union Water Framework Directive monitoring stations. Across recreational sites, which have generally high water quality levels within our sample, we find that boaters favour sites with better water quality; as indicated by biological oxygen demand and phosphates metrics. We also find that for each additional 10 km distance from respondents' homes the probability that a site is visited declines by up to 10%. Preferences for other site attributes, such as boat slipways, parking and toilet facilities, were counter to expectation but reflects the fact that all boat users do not necessarily access or need all facilities provided.

We propose a method to predict rational counterfactual demand responses from repeated cross-sections. We derive bounds on the distribution of counterfactual demands that are consistent with the Weak Axiom of Revealed Preferences, without putting any restriction on the preference heterogeneity across consumers. In contrast to existing methods, we also allow for endogeneity of total expenditures. In addition, the method can readily incorporate restrictions on the income elasticities of the consumption goods, which further enhances its identifying power (i.e. tighter bounds). We illustrate our approach through an application to data drawn from the U.S. Consumer Expenditure Survey., SCOPUS: ar.j, info:eu-repo/semantics/published

We extend a standard taxable income model with its typical functional-form assumptions to account for nonlinear budget sets. We propose a new method to estimate taxable income elasticity that is more policy relevant than the typically estimated elasticity based on linearized budget sets. Using U.S. data from the NBER tax panel for 1979-1990 and differencing methods, we estimate an elasticity of 0.75 for taxable income and 0.20 for broad income. These estimates are higher than those obtained by specifications based on linearization. Our approach offers a new way to address the problem of endogenous observed marginal tax rates.

Choice models produce part-worth estimates that tell us what product attributes individuals prefer. However, to understand the drivers of these preferences we need to model consumer heterogeneity by specifying covariates that explain cross-sectional variation in the part-worths. In this paper we demonstrate a way to generate covariates for the upper level of a hierarchical Bayesian choice model that lead to an improvement in explaining preference heterogeneity. The covariates are uncovered by augmenting the choice model with a grade of membership model. We find improvement in model fit and inference using the covariates generated with the proposed model over competing models using standard discrete covariates. This paper provides an important step in a continued synthesis between mixed membership models, which include models for text analysis and more traditional discrete multivariate data, and marketing models.

This paper reviews empirical research on migration and land use impacts associated with climate change. Household migration arises due to changes in economic opportunities and climate amenities resulting from climate change. Throughout the paper, efforts are made to highlight key empirical findings as well as areas in need of additional research. The existing literature is discussed through the lens of reduced form and structural approaches paying particular attention to preference heterogeneity and the often complex interconnections between economic sectors in determining household migration. Areas in need of additional research include improving our understanding of the coupling between human and natural systems, accounting for endogenous attributes and payoffs, and incorporating richer characterizations of the tradeoffs driving migration across multiple economic sectors.

In this article, we employ a discrete choice experiment to examine preferences for functional dairy product attributes and willingness-to-pay estimates for consumers in Germany. We estimate preference heterogeneity by linking stated preference choice data not only to socioeconomic characteristics but also to attitudinal statements in a latent class framework. The empirical results indicate the existence of class-specific preference heterogeneity based on the consumers’ attitude towards functional foods, emphasizing the importance of attitudinal data in explaining consumers’ choice behavior. Our estimates demonstrate that within a class, consumers’ preferences are in accordance with their responses to attitudinal statements, that is functional food skeptics prefer non-functional dairy products, while functional food advocates have a negative preference for non-functional dairy products. The findings also show that all consumers place high value on dairy products enriched with known functional ingredients such as omega-3 fatty acids.