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Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values

Understanding consumers’ willingness-to-pay (WTP) value is vital for rational valuation of consumers’ benefit. Stated preference techniques such as Choice Experiment (CE) have been widely used to account for WTP value and one of the popular model specifications is the Mixed Logit (MXL) model. In the...

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Main Authors: W Mohamad, Wan Norhidayah, Willis, Ken, Powe, Neil
Format: Article
Language:English
Published: Faculty of Economics and Management, Universiti Putra Malaysia 2019
Online Access:http://psasir.upm.edu.my/id/eprint/76501/1/12%29%20Effect%20of%20Different%20Distributional%20Assumption.pdf
http://psasir.upm.edu.my/id/eprint/76501/
http://www.ijem.upm.edu.my/vol13no2/12)%20Effect%20of%20Different%20Distributional%20Assumption.pdf
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spelling my.upm.eprints.765012020-02-04T08:46:56Z http://psasir.upm.edu.my/id/eprint/76501/ Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values W Mohamad, Wan Norhidayah Willis, Ken Powe, Neil Understanding consumers’ willingness-to-pay (WTP) value is vital for rational valuation of consumers’ benefit. Stated preference techniques such as Choice Experiment (CE) have been widely used to account for WTP value and one of the popular model specifications is the Mixed Logit (MXL) model. In the MXL model, it is essential to assume the types of distribution of random parameters. The specification of MXL models with different distributional assumptions of random parameters has been explored by many researchers. Nevertheless, the effect of different distributional assumptions of random parameters on goodness-of-fit, the significance of the coefficients and WTP values has not been studied adequately particularly in the context of Malaysia. In the present work, the analysis is carried out in this regard based on visitors’ preferences for tourist facilities at Tasik Kenyir, Malaysia. A number of MXL models were attempted with different distributional assumptions of random parameters; normal, log-normal, triangular and uniform. The results suggested that, in all MXL models, the goodness-of-fit statistics, the significance of the attribute coefficients and WTP values were quite comparable, except for the log-normal distribution. The methodological implications concern the importance of developing several MXL models with different distributional assumptions as well as the recommendation for policy makers to improve the facilities at the lake. Faculty of Economics and Management, Universiti Putra Malaysia 2019 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/76501/1/12%29%20Effect%20of%20Different%20Distributional%20Assumption.pdf W Mohamad, Wan Norhidayah and Willis, Ken and Powe, Neil (2019) Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values. International Journal of Economics and Management, 13 (2). pp. 421-433. ISSN 1823-836X; ESSN: 2600-9390 http://www.ijem.upm.edu.my/vol13no2/12)%20Effect%20of%20Different%20Distributional%20Assumption.pdf
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description Understanding consumers’ willingness-to-pay (WTP) value is vital for rational valuation of consumers’ benefit. Stated preference techniques such as Choice Experiment (CE) have been widely used to account for WTP value and one of the popular model specifications is the Mixed Logit (MXL) model. In the MXL model, it is essential to assume the types of distribution of random parameters. The specification of MXL models with different distributional assumptions of random parameters has been explored by many researchers. Nevertheless, the effect of different distributional assumptions of random parameters on goodness-of-fit, the significance of the coefficients and WTP values has not been studied adequately particularly in the context of Malaysia. In the present work, the analysis is carried out in this regard based on visitors’ preferences for tourist facilities at Tasik Kenyir, Malaysia. A number of MXL models were attempted with different distributional assumptions of random parameters; normal, log-normal, triangular and uniform. The results suggested that, in all MXL models, the goodness-of-fit statistics, the significance of the attribute coefficients and WTP values were quite comparable, except for the log-normal distribution. The methodological implications concern the importance of developing several MXL models with different distributional assumptions as well as the recommendation for policy makers to improve the facilities at the lake.
format Article
author W Mohamad, Wan Norhidayah
Willis, Ken
Powe, Neil
spellingShingle W Mohamad, Wan Norhidayah
Willis, Ken
Powe, Neil
Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values
author_facet W Mohamad, Wan Norhidayah
Willis, Ken
Powe, Neil
author_sort W Mohamad, Wan Norhidayah
title Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values
title_short Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values
title_full Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values
title_fullStr Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values
title_full_unstemmed Effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values
title_sort effect of different distributional assumption of random parameters in the mixed logit model on willingness-to-pay values
publisher Faculty of Economics and Management, Universiti Putra Malaysia
publishDate 2019
url http://psasir.upm.edu.my/id/eprint/76501/1/12%29%20Effect%20of%20Different%20Distributional%20Assumption.pdf
http://psasir.upm.edu.my/id/eprint/76501/
http://www.ijem.upm.edu.my/vol13no2/12)%20Effect%20of%20Different%20Distributional%20Assumption.pdf
_version_ 1662756532179173376
score 13.211869

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