Ordered choices and heterogeneity in attribute processing

Abstract

A growing number of empirical studies involve the assessment of influences on a choice amongst ordered discrete alternatives. Ordered logit and probit models are well known, including extensions to accommodate random parameters and heteroscedasticity in unobserved variance. This paper extends the ordered choice random parameter model to permit random parameterization of thresholds and decomposition to establish observed sources of systematic variation in the threshold parameter distribution. We illustrate the empirical gains of this model over the traditional ordered choice model in the context of identifying candidate influences on the role that specific attributes play, in the sense of being ignored or not, in an individual’s choice amongst unlabelled attribute packages of alternative tolled and non-tolled routes for the commuting trip. The empirical ordering represents the number of attributes attended to from the full fixed set. The evidence suggests that there is significant heterogeneity associated with the thresholds, that can be connected to systematic sources associated with the respondent (i.e., gender) and the choice experiment, and hence the generalized extension of the ordered choice model is an improvement, behaviourally, over the simpler model.