On the use of flexible mixing distributions in WTP space: an induced value choice experiment |
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| Authors: | Claudia Bazzani Marco A Palma Rodolfo M Nayga Jr |
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| Affiliation: | 1. Department of Business Administration, University of Verona, Verona, Italy;2. Department of Agricultural Economics, Texas, College Station, TX, USA.;3. Department of Agricultural Economics and Agribusiness, University of Arkansas, Fayetteville, AR, USA. |
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| Abstract: | In this study, we use data from an induced value choice experiment to compare estimates from mixed logit models in willingness to pay (WTP) space using different parameter distributional assumptions. Specifically, we test differences in WTP estimates when using flexible parameter mixing distributions (i.e. Legendre polynomials, step functions and splines) and conventional parameter distributions (normal and lognormal). Similar WTP estimates are obtained. However, we observe that WTP estimates are statistically different from the induced value when conventional distributions are assumed, but they are not when more flexible distributions are assumed. This suggests that flexible distributions can provide more reliable WTP estimates. |
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| Keywords: | flexible mixing distribution induced value choice experiment normal distribution WTP space |
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