Latent Thresholds Analysis of Choice Data Under Value Uncertainty

20 Pages Posted: 8 Apr 2020

See all articles by Mimako Kobayashi

Mimako Kobayashi

University of California, Davis

Klaus Moeltner

University of Nevada - Department of Resource Economics

Kimberly Rollins

University of Nevada, Reno - Department of Resource Economics

Date Written: January 2012

Abstract

In many non‐market valuation settings stakeholders will be uncertain as to their exact willingness‐to‐pay for a proposed environmental amenity. It then makes sense for the analyst to treat this value as a random variable with distribution only known to the respondent. In stated preference settings, researchers have used elicitation formats with multiple bids and uncertain‐response options to learn about individual value distributions. Past efforts have focused on inference involving the expectation of individual densities. This requires stringent and likely unrealistic assumptions regarding the shape or moments of individual value distributions. We propose a Latent Thresholds Estimator that focuses instead on the range, i.e. minimum and maximum willingness‐to‐pay of individual respondents. The estimator efficiently exploits correlation patterns in individual responses and does not require any restrictive assumptions on underlying values. It also nests some of the existing approaches, which are not statistically supported for our empirical application.

Keywords: stated preference, multiple bounded elicitation, polychotomous choice, Bayesian estimation, value uncertainty

Suggested Citation

Kobayashi, Mimako and Moeltner, Klaus and Rollins, Kimberly, Latent Thresholds Analysis of Choice Data Under Value Uncertainty (January 2012). American Journal of Agricultural Economics, Vol. 94, Issue 1, pp. 189-208, 2012, Available at SSRN: https://ssrn.com/abstract=3571681 or http://dx.doi.org/10.1093/ajae/aar129

Mimako Kobayashi (Contact Author)

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

Klaus Moeltner

University of Nevada - Department of Resource Economics ( email )

1664 N. Virginia Street
Reno, NV 89557
United States
(775) 784-4803 (Phone)
(775) 784-1342 (Fax)

Kimberly Rollins

University of Nevada, Reno - Department of Resource Economics ( email )

1664 N. Virginia St
Reno, NV 89557
United States
775-784-1677 (Phone)

HOME PAGE: http://www.ag.unr.edu/rollins/

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