Information Processing Strategies in Stated Choice Studies: The Implications on Willingness to Pay of Respondents Ignoring Specific Attributes

Abstract

Individuals processing the information in a stated choice experiment are typically assumed to evaluate each and every attribute offered within and between alternatives and to choose their most preferred alternative. It has always been thought though that some attributes are ignored in this process for many reasons including a coping strategy to handle their perception of the complexity of the choice task. However analysts proceed to estimate discrete choice models as if all attributes have influenced the outcome to some degree. The cognitive processes used to evaluate trade-offs are complex with boundaries often placed on the task to assist the respondent. These boundaries can include adding up attributes (eg components of travel time and cost), prioritising attributes and focussing on the primary influences and ignoring specific attributes. In this paper we investigate the implications of bounding the information processing task by attribute elimination through ignoring one or more attributes. Using a sample of car commuters in Sydney we estimate mixed logit models which assume that all attributes are candidate contributors, and models which assume that certain attributes are ignored (based on supplementary information provided by respondents). We derive individual-respondent parameters using a conditional choice specification of mixed logit, and compare the value of travel time savings distribution under alternative information processing regimes. As expected, assuming that all attributes are not ignored and duly processed, leads to biased estimates of parameters which over-estimate willingness to pay (WTP).