Author:
Jumamyradov Maksat,Craig Benjamin M.,Greene William H.,Munkin Murat
Abstract
AbstractIn discrete choice experiments (DCEs), differences between respondents’ preferences may be associated with observable or unobservable factors. Unobservable heterogeneity, related to latent factors associated with the choices of individuals, may be modelled using correlated (i.e. informative heterogeneity) or uncorrelated (i.e. uninformative heterogeneity) individual-specific parameters of a logit model. In this study, we simulated unobservable heterogeneity among DCE respondents and compared the results of the maximum simulated likelihood (MSL) estimation of the mixed logit model when correctly specified and mis-specified. These results show that the MSL estimates are biased and can differ greatly from the true parameters, even when correctly specified. Before estimating a mixed logit model, we highly recommend that choice modellers conduct simulation analyses to assess the potential extent of biases before relying on the MSL estimates, particularly their variances and correlations, and then ultimately determine which model specification produces the least bias.
Funder
EuroQol Research Foundation
Publisher
Springer Science and Business Media LLC
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