Attributes aggregation in multi-attribute choice: need we worry?
Choice experiments (CEs) are commonly employed in economics to value non-marketed goods. Within CEs it is assumed that individuals consider all attributes and make a trade-off between them. However, attributes-based decision-making is cognitively demanding, triggering the adoption of alternative decision rules. There is a growing interest in heuristics/rules that individuals use when processing information in multi-attribute choice. We develop a framework in which individuals restructure the multi-attribute information into a meta-attribute (e.g., convert non-monetary attributes into a single quality dimension) before making their decisions. We estimated a non-linear utility model allowing attribute aggregation (AA) to depend on the information structure. This new model assumes participants are more likely to aggregate the quality information into a meta-attribute when the quality attributes provide similar information about the good or service. We find evidence of attribute aggregation when responding to CEs, with the probability of adopting attribute aggregation greater for homogenous information. AA is more prevalent amongst older and female participants, leads to improvements in model fit and has implications for welfare estimates.
External collaborator: Nicolas Krucien (Evidera)
Genie, M., Ryan, M. and Krucien, N. (2018) 'Lancasterian theory of demand or the value-price heuristic in multi-attribute choices?', 12th European Conference on Health Economics (EuHEA), Maastricht, The Netherlands, 11-14 July 2018.