Utility in WTP space: a tool to address confounding random scale effects in destination choice to the Alps

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dc.contributor.authorScarpa, Riccardo
dc.contributor.authorThiene, Mara
dc.contributor.authorTrain, Kenneth
dc.date.accessioned2008-12-15T00:12:26Z
dc.date.available2008-12-15T00:12:26Z
dc.date.issued2006-12
dc.description.abstractDestination choice models with individual-specific taste variation have become the presumptive analytical approach in applied nonmarket valuation. Under the usual specification, tastes are represented by coefficients of site attributes that enter utility, and the distribution of these coefficients is estimated. The distribution of willingness-to-pay (WTP) for site attributes is then derived from the estimated distribution of coefficients. Though conceptually appealing this procedure often results in untenable distributions of willingness to pay. An alternative procedure is to estimate the distribution of willingness to pay directly, through a re-parameterization of the model. We compare hierarchical Bayes and maximum simulated likelihood estimates under both approaches, using data on site choice in the Alps. We find that models parameterized in terms of WTP provide more reasonable estimates for the distribution of WTP, and also fit the data better than models parameterized in terms of attribute coefficients. This approach to parameterizing utility is hence deemed promising for applied nonmarket valuation.en_US
dc.format.mimetypeapplication/pdf
dc.identifier.citationScarpa, R., Thiene, M. & Train, K. (2006). Utility in WTP space: a tool to address confounding random scale effects in destination choice to the Alps. (Department of Economics Working Paper Series, Number 15/06). Hamilton, New Zealand: University of Waikato.en_US
dc.identifier.urihttps://hdl.handle.net/10289/1626
dc.language.isoen
dc.relation.ispartofseriesDepartment of Economics Working Paper Series
dc.subjectmixed logiten_US
dc.subjectrandom utility parametersen_US
dc.subjectrandom willingness to payen_US
dc.subjecttravel cost methoden_US
dc.subjectdestination choice modelingen_US
dc.titleUtility in WTP space: a tool to address confounding random scale effects in destination choice to the Alpsen_US
dc.typeWorking Paperen_US
uow.relation.series15/06
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