Aggregation of common-metric attributes in preference revelation in choice experiments and implications for willingness to pay

Abstract

There is a growing literature that promotes the notion of process heterogeneity in the way that individuals evaluate packages of attributes in real or hypothetical markets and make choices. Empirical evidence suggests that individuals use a number of processing strategies such as cancellation, referencing, and attribute aggregation, the latter occurring where there is a common metric. In this paper we consider the threshold relationship between attributes that are defined on a common metric (e.g., minutes or dollars), in order to gain evidence on the extent to which such attributes might be added up or not in preference revelation. The model specification does not require supplementary information on whether specific individuals claimed to have added up attributes; rather we structure a nonlinear utility function that permits a probabilistic preservation or aggregation of each attribute. We translate this new evidence into a willingness to pay (WTP) for travel time savings, and contrast it with the results from the traditional linear additive model, as well as establishing the extent to which self-stated attribute addition systematically varies with WTP and component inputs into WTP. The implications for environmental assessment are highlighted.