A comparison of regret-based and utility-based discrete choice modelling – an empirical illustration with hospital bed choice

Paul, Pavitra; Berlin, Claudia; Maessen, Maud; Valtonen, Hannu (2018). A comparison of regret-based and utility-based discrete choice modelling – an empirical illustration with hospital bed choice. Applied economics, 50(40), pp. 4295-4305. Routledge 10.1080/00036846.2018.1444260

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There is some concern that the unobserved preference heterogeneity in random utility maximization theory-based discrete choice experiment modelling is an important source of error variability. The randomness in utility is often interpreted as interpersonal preference heterogeneity but it can also be intrapersonal random variation in preferences. We compare utility maximization and regret minimization-based choice models’ sensitivity to individual heterogeneity, examine differences between two consecrated models and validate with empirical illustrations. We use frequency of category (public, semi-private, and private) of bed chosen from Swiss cross-sectional datasets (2007–2012) to compare two approaches – utility maximization and regret minimization by applying multinomial logit (MNL) models in regard to the variances in utility (regret) function, goodness-of-fit and predicted marginal effects (pseudo-elasticity) of additional payment. We find parameters with the same sign and estimates with almost same order of magnitude in both the approaches. The statistical significance of attribute effects is consistent in all variants of utility -based MNL models while effects of different attributes are significant only in heteroskedastic extreme value (HEV) variant of regret-based MNL models. This empirical illustration suggests that HEV variant of regret-based models perform better in capturing attribute effects in choice behaviour.

Item Type:

Journal Article (Original Article)

Division/Institute:

04 Faculty of Medicine > Pre-clinic Human Medicine > Institute of Social and Preventive Medicine

UniBE Contributor:

Berlin, Claudia and Maessen, Maud

Subjects:

600 Technology > 610 Medicine & health
300 Social sciences, sociology & anthropology > 360 Social problems & social services

ISSN:

0003-6846

Publisher:

Routledge

Language:

English

Submitter:

Tanya Karrer

Date Deposited:

09 Mar 2018 11:26

Last Modified:

01 Jul 2018 02:22

Publisher DOI:

10.1080/00036846.2018.1444260

Uncontrolled Keywords:

Behavioural paradigm; choice modelling; hospital bed choice; pseudo-elasticity and random regret

BORIS DOI:

10.7892/boris.112580

URI:

https://boris.unibe.ch/id/eprint/112580

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