Scale heterogeneity in discrete choice experiment

An application of generalized mixed logit model in air travel choice

Ishrat Hossain, Najam U Saqib, Munshi Masudul Haq

    Research output: Contribution to journalArticle

    2 Citations (Scopus)

    Abstract

    This study explores to what extent scale heterogeneity (i.e., varying standard deviation of the errors across consumers) is important in air travel choice using data from a stated preference discrete choice experiment. We used generalized mixed logit model (GMIXL) that nests scale and taste heterogeneity in the context of air travel ticket choice. We found empirical evidence of the importance of often-neglected scale heterogeneity along with pre-dominant taste heterogeneity. The findings suggests that it is important to account for various forms of heterogeneity with GMIXL to model air travel demand to identify variety of consumer segments, which has implications for airline optimal menu of ticket offerings and pricing strategies.
    Original languageEnglish
    Pages (from-to)85-88
    Number of pages4
    JournalEconomics Letters
    Volume172
    Early online date30 Aug 2018
    DOIs
    Publication statusPublished - Nov 2018

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    Air
    Discrete choice experiment
    Mixed logit model
    Taste heterogeneity
    Airlines
    Pricing strategy
    Travel demand
    Stated preference
    Standard deviation
    Empirical evidence
    Menu

    Keywords

    • choice experiment
    • generalized logit
    • scale heterogeneity
    • air travel

    Cite this

    Scale heterogeneity in discrete choice experiment : An application of generalized mixed logit model in air travel choice. / Hossain, Ishrat; Saqib, Najam U; Haq, Munshi Masudul.

    In: Economics Letters, Vol. 172, 11.2018, p. 85-88.

    Research output: Contribution to journalArticle

    Hossain, Ishrat ; Saqib, Najam U ; Haq, Munshi Masudul. / Scale heterogeneity in discrete choice experiment : An application of generalized mixed logit model in air travel choice. In: Economics Letters. 2018 ; Vol. 172. pp. 85-88.
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    abstract = "This study explores to what extent scale heterogeneity (i.e., varying standard deviation of the errors across consumers) is important in air travel choice using data from a stated preference discrete choice experiment. We used generalized mixed logit model (GMIXL) that nests scale and taste heterogeneity in the context of air travel ticket choice. We found empirical evidence of the importance of often-neglected scale heterogeneity along with pre-dominant taste heterogeneity. The findings suggests that it is important to account for various forms of heterogeneity with GMIXL to model air travel demand to identify variety of consumer segments, which has implications for airline optimal menu of ticket offerings and pricing strategies.",
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    note = "Acknowledgements This work was supported in part by the Qatar National Research Fund, Qatar (grant number YSREP1-002-5-001). We thank Denzil Fiebig and anonymous reviewer for their helpful comments.",
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