Customer-Specific Taste Parameters and Mixed Logit: Households' Choice of Electricity Supplier

In a discrete choice situation, information about the tastes of each sampled customer is inferred from estimates of the distribution of tastes in the population. First, maximum likelihood procedures are used to estimate the distribution of tastes in the population using the pooled data for all sampled customers. Then, the distribution of tastes of each sampled customer is derived conditional on the observed data for that customer and the estimated population distribution of tastes (accounting for uncertainty in the population estimates.) We apply the method to data on residential customers' choice among energy suppliers in conjoint-type experiments. The estimated distribution of tastes provides practical information that is useful for suppliers in designing their offers. The conditioning for individual customers is found to differentiate customers effectively for marketing purposes and to improve considerably the predictions in new situations.

The wider value of rural rail provision

In the context of recent plans for public sector expenditure, the value for money provided by rural public transport is an important issue in Britain and elsewhere, and one aspect of this is the option and non-use value placed on public transport by residents. Whilst there are a small number of studies which have estimated option and non-use values, they rest largely on contingent valuation methods which are subject to dangers of bias, and concentrate on commuter services into cities rather than truly rural services. This paper seeks to overcome these problems by conducting a Stated Preference (SP) experiment in rural communities, which values the provision of rail services and compares this against Post Office provision. We believe that using this approach, and allowing respondents to compare willingness to pay for rail services with that for another important rural service subject to threatened cuts, should produce more reliable results; moreover we achieve this using self completion questionnaires rather than much more expensive interviews. Our results show much lower values for rail than previous studies, though this is to be expected in truly rural areas where the likelihood of commuting by rail is much lower. Other non-use values are greater than option values in this context

On the use of a Modified Latin Hypercube Sampling (MLHS) approach in the estimation of a Mixed Logit model for vehicle choice

Quasi-random number sequences have been used extensively for many years in the simulation of integrals that do not have a closed-form expression, such as Mixed Logit and Multinomial Probit choice probabilities. Halton sequences are one example of such quasi-random number sequences, and various types of Halton sequences, including standard, scrambled, and shuffled versions, have been proposed and tested in the context of travel demand modeling. In this paper, we propose an alternative to Halton sequences, based on an adapted version of Latin Hypercube Sampling. These alternative sequences, like scrambled and shuffled Halton sequences, avoid the undesirable correlation patterns that arise in standard Halton sequences. However, they are easier to create than scrambled or shuffled Halton sequences. They also provide more uniform coverage in each dimension than any of the Halton sequences. A detailed analysis, using a 16-dimensional Mixed Logit model for choice between alternative-fuelled vehicles in California, was conducted to compare the performance of the different types of draws. The analysis shows that, in this application, the Modified Latin Hypercube Sampling (MLHS) outperforms each type of Halton sequence. This greater accuracy combined with the greater simplicity make the MLHS method an appealing approach for simulation of travel demand models and simulation-based models in general

Closed-Form Bayesian Inferences for the Logit Model via Polynomial Expansions

Articles in Marketing and choice literatures have demonstrated the need for incorporating person-level heterogeneity into behavioral models (e.g., logit models for multiple binary outcomes as studied here). However, the logit likelihood extended with a population distribution of heterogeneity doesn't yield closed-form inferences, and therefore numerical integration techniques are relied upon (e.g., MCMC methods). We present here an alternative, closed-form Bayesian inferences for the logit model, which we obtain by approximating the logit likelihood via a polynomial expansion, and then positing a distribution of heterogeneity from a flexible family that is now conjugate and integrable. For problems where the response coefficients are independent, choosing the Gamma distribution leads to rapidly convergent closed-form expansions; if there are correlations among the coefficients one can still obtain rapidly convergent closed-form expansions by positing a distribution of heterogeneity from a Multivariate Gamma distribution. The solution then comes from the moment generating function of the Multivariate Gamma distribution or in general from the multivariate heterogeneity distribution assumed. Closed-form Bayesian inferences, derivatives (useful for elasticity calculations), population distribution parameter estimates (useful for summarization) and starting values (useful for complicated algorithms) are hence directly available. Two simulation studies demonstrate the efficacy of our approach.Comment: 30 pages, 2 figures, corrected some typos. Appears in Quantitative Marketing and Economics vol 4 (2006), no. 2, 173--20

Engagement Risk: Perceptions And Strategies From Audit Partners

The audit function creates several important relationships among the various parties.  One of the significant and potentially problematic relationships is between the audit firm and the audit client.  The decision by the audit firm to accept or retain a client is crucial because of the potential risk of being associated with certain clients. The potential damage can range from financial loss and/or loss of prestige to the ultimate demise of the audit firm.  Engagement risk is considered to be composed of three components: entity’s business risk, audit risk, and auditor’s business risk. This research questioned whether audit firms have significantly changed their views regarding engagement risk and how they evaluate and manage this risk.  An analysis of the surveys revealed that 83% of the respondents believed their views regarding the importance of engagement risk have changed, but only to a moderate degree.  In evaluating engagement risk, audit partners considered management integrity in general, management integrity toward fraud, and the presence of the elements of the fraud triangle to be the most important factors. Assignment of more experienced audit staff and increased substantive tests of account balances were the most frequently used mitigating strategies.  Based upon these results, which were consistent with our previous study, it appears there have not been significant changes in audit partners’ views regarding the importance of the client acceptance/retention decision.  &nbsp

Engagement Risk: Perceptions And Strategies From Audit Partners

The audit function creates several important relationships among the various parties.  One of the significant and potentially problematic relationships is between the audit firm and the audit client.  The decision by the audit firm to accept or retain a client is crucial because of the potential risk of being associated with certain clients. The potential damage can range from financial loss and/or loss of prestige to the ultimate demise of the audit firm.  Engagement risk is considered to be composed of three components: entity’s business risk, audit risk, and auditor’s business risk. This research questioned whether audit firms have significantly changed their views regarding engagement risk and how they evaluate and manage this risk.  An analysis of the surveys revealed that 83% of the respondents believed their views regarding the importance of engagement risk have changed, but only to a moderate degree.  In evaluating engagement risk, audit partners considered management integrity in general, management integrity toward fraud, and the presence of the elements of the fraud triangle to be the most important factors. Assignment of more experienced audit staff and increased substantive tests of account balances were the most frequently used mitigating strategies.  Based upon these results, which were consistent with our previous study, it appears there have not been significant changes in audit partners’ views regarding the importance of the client acceptance/retention decision.  &nbsp

Using stated preference methods to assess environmental impacts of forest biomass power plants in Portugal

As a renewable energy source, the use of forest biomass for electricity generation is advantageous in comparison with fossil fuels, however the activity of forest biomass power plants causes adverse impacts, affecting particularly neighbouring communities. The main objective of this study is to estimate the effects of the activity of forest biomass power plants on the welfare of two groups of stakeholders, namely local residents and the general population and we apply two stated preference methods: contingent valuation and discrete choice experiments, respectively. The former method was applied to estimate the minimum compensation residents of neighbouring communities of two forest biomass power plants in Portugal would be willing to accept. The latter method was applied among the general population to estimate their willingness to pay to avoid specific environmental impacts. The results show that the presence of the selected facilities affects individuals’ well-being. On the other hand, in the discrete choice experiments conducted among the general population all impacts considered were significant determinants of respondents’ welfare levels. The results of this study stress the importance of performing an equity analysis of the welfare effects on different groups of stakeholders from the installation of forest biomass power plants, as their effects on welfare are location and impact specific. Policy makers should take into account the views of all stakeholders either directly or indirectly involved when deciding crucial issues regarding the sitting of new forest biomass power plants, in order to achieve an efficient and equitable outcome

Factors influencing job preferences of health workers providing obstetric care : results from discrete choice experiments in Malawi, Mozambique and Tanzania

BACKGROUND: Task shifting from established health professionals to mid-level providers (MLPs) (professionals who undergo shorter training in specific procedures) is one key strategy for reducing maternal and neonatal deaths. This has resulted in a growth in cadre types providing obstetric care in low and middle-income countries. Little is known about the relative importance of the different factors in determining motivation and retention amongst these cadres. METHODS: This paper presents findings from large sample (1972 respondents) discrete choice experiments to examine the employment preferences of obstetric care workers across three east African countries. RESULTS: The strongest predictors of job choice were access to continuing professional development and the presence of functioning human resources management (transparent, accountable and consistent systems for staff support, supervision and appraisal). Consistent with similar works we find pay and allowances significantly positively related to utility, but financial rewards are not as fundamental a factor underlying employment preferences as many may have previously believed. Location (urban vs rural) had the smallest average effect on utility for job choice in all three countries. CONCLUSIONS: These findings are important in the context where efforts to address the human resources crisis have focused primarily on increasing salaries and incentives, as well as providing allowances to work in rural areas

Preferencias hacia el origen de un alimento étnico y la influencia de variables psicográficas

[EN] In recent years, knowledge and consumption of ethnic food has spread in Spain, among other factors, enhanced by immigration. Immigrants constitute a new market segment, with specific food demands that respond to the necessity of keeping their culinary traditions. In this research a choice experiment is conducted in order to investigate Latin-American consumers’ preferences toward an essential food in their diets, corn flour. In order to allow preferences to differ across individuals, a mixed logit model is estimated. Three psychographic variables are contemplated as possible sources for preference heterogeneity: the degree of food neo-phobia, ethnocentrism and personal values. Consumers more neo-phobic, and those with personal values than emphasize personal development, are more price-sensitive, while, more ethnocentric consumers favour the patriotic origin of the ethnic food.[ES] En los últimos años, el conocimiento y consumo de comidas y/o alimentos étnicos se ha difundido en el ámbito nacional. Diversos factores, entre los que destaca la inmigración, han sido decisivos en su comercialización. El mantener las costumbres alimentarias de su país de origen hace que los inmigrantes conformen segmentos de consumidores que generan una demanda específica en el mercado. Mediante un experimento de elección, se investigan las preferencias de los consumidores latinoamericanos con respecto a un alimento esencial en sus dietas, la harina de maíz. Para permitir que las preferencias puedan diferir entre individuos, se estima un modelo logit mixto. Entre las posibles fuentes explicativas de la heterogeneidad de preferencias, se contrasta la influencia de factores psicográficos, tales como los valores personales, la fobia a los alimentos nuevos y el etnocentrismo del consumidor. Así, se ha encontrado que los consumidores más neo-fóbicos y los más orientados hacia el desarrollo personal, tienden a ser más sensibles a variaciones en el precio; y los más etnocentristas manifiestan mayor preferencia hacia la harina de su país de origen.Camarena-Gómez, DM.; Sanjuán-López, AI. (2010). Preferences toward the origin of an ethnic food and the influence of psychographic variables. Economía Agraria y Recursos Naturales - Agricultural and Resource Economics. 10(1):71-99. https://doi.org/10.7201/earn.2010.01.05SWORD719910

Correlation and scale in mixed logit models

This paper examines sources of correlation among utility coefficients in models allowing for random heterogeneity, including correlation that is induced by random scale heterogeneity. We distinguish the capabilities and limitations of various models, including mixed logit, generalized multinomial logit (G-MNL), latent class, and scale-adjusted latent class. We demonstrate that (i) mixed logit allows for all forms of correlation, including scale heterogeneity, (ii) G-MNL is a restricted form of mixed logit that, with an appropriate implementation, can allow for scale heterogeneity but (in its typical form) not other sources of correlation, (iii) none of the models disentangles scale heterogeneity from other sources of correlation, and (iv) models that assume that the only source of correlation is scale heterogeneity necessarily capture, in the estimated scale parameter, whatever other sources of correlation exist