Choice experiments: the art of understanding choice behaviour, estimating willingness to pay, and predicting market shares

Choice models are widely used to study the behaviour of decision makers in transport, marketing, health, and environmental economics. Most of these models are based on theory and methods for analysing discrete choice as developed by Nobel prize winner Daniel McFadden. To collect data to estimate such models, choice experiments in online surveys or laboratory settings can be conducted. In this seminar a brief overview of choice models and choice experiments is given. Next, to illustrate the types of analyses that can be done with choice experiments, results of three choice experiments are presented. The first study predicts market shares for future last-mile parcel delivery services, where consumers were asked to imagine a future world where drones and parcel lockers may replace traditional posties. The second study analyses the willingness to pay a toll for travel time savings via a laboratory experiment with driving simulators. The third study analyses preferences towards future pandemic policies where respondents in various countries were asked to make trade-offs between restrictions, deaths, and job losses.