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Changing with the Tide: Semiparametric Estimation of Preference Dynamics

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  • Thijs Dekker
  • Paul Koster
  • Roy Brouwer

Abstract

We contrast the discovered preference hypothesis against the theory of coherent arbitrariness in a split-sample stated choice experiment on flood-risk exposure. A semiparametric local multinomial logit model is developed as an alternative to the Swait and Louviere (1993) test procedure controlling for preference dynamics within and between samples. The proposed model supports the discovered preference hypothesis by means of a decaying starting point bias. The Swait and Louviere (1993) test procedure reaches a different conclusion. It rejects the assumption of stable preferences, but most preference dynamics tend to be smoothed out, causing a more erratic pattern of preference dynamics.

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  • Thijs Dekker & Paul Koster & Roy Brouwer, 2014. "Changing with the Tide: Semiparametric Estimation of Preference Dynamics," Land Economics, University of Wisconsin Press, vol. 90(4), pages 717-745.
  • Handle: RePEc:uwp:landec:v:90:y:2014:i:4:p:717-745
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    8. Wiktor Budziński & Danny Campbell & Mikołaj Czajkowski & Urška Demšar & Nick Hanley, 2018. "Using Geographically Weighted Choice Models to Account for the Spatial Heterogeneity of Preferences," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 606-626, September.
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    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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