Logit Mixed Logit Under Asymmetry and Multimodality of WTP: a Monte Carlo Evaluation

Scarpa, R.; Franceschinis, C.; Thiene, M.

doi:10.1111/ajae.12122

Logit Mixed Logit Under Asymmetry and Multimodality of WTP: a Monte Carlo Evaluation

Scarpa, R.; Franceschinis, C.; Thiene, M.

Authors

Professor Riccardo Scarpa riccardo.scarpa@durham.ac.uk
Professor

C. Franceschinis

M. Thiene

Abstract

The logit‐mixed logit (LML) model advances choice modeling by generalizing previous parametric and semi‐nonparametric specifications and allowing retrieval of flexible taste distributions. Using standard operating conditions in the field, we report results from Monte Carlo experiments designed to assess the finite sample bias‐variance tradeoff for the LML using as a benchmark conventional Mixed logit models (MXL) under asymmetric and multimodal taste distributions. The LML specification always outperforms the MXL in terms of bias, but when the variance around modes is high the mean squared error (MSE) is lower than that of MXL only at sample sizes larger than usual and with some nuances. D‐error minimizing experimental design predicated on multinomial logit significantly reduces MSE, but no clear winner is found between polynomial, step, and spline functions for the multidimensional grid function. Analysis of empirical data from a choice experiment on tap water shows that multimodality emerges only if higher number of node parameters are used in the LML.

Citation

Scarpa, R., Franceschinis, C., & Thiene, M. (2021). Logit Mixed Logit Under Asymmetry and Multimodality of WTP: a Monte Carlo Evaluation. American Journal of Agricultural Economics, 103(2), 643-662. https://doi.org/10.1111/ajae.12122

Journal Article Type	Article
Acceptance Date	May 26, 2020
Online Publication Date	Aug 28, 2020
Publication Date	Mar 1, 2021
Deposit Date	May 29, 2020
Publicly Available Date	Aug 28, 2021
Journal	American Journal of Agricultural Economics
Print ISSN	0002-9092
Publisher	Agricultural and Applied Economics Association
Peer Reviewed	Peer Reviewed
Volume	103
Issue	2
Pages	643-662
DOI	https://doi.org/10.1111/ajae.12122
Public URL	https://durham-repository.worktribe.com/output/1269713

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http://creativecommons.org/licenses/by-nc/4.0/

Copyright Statement
This is the peer reviewed version of the following article: Logit Mixed Logit Under Asymmetry and Multimodality of WTP: a Monte Carlo Evaluation, which has been published in final form at https://doi.org/10.1111/ajae.12122. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.