Model selection for the mixed logit with Bayesian estimation

Balcombe, K., Fraser, I. and Chalak, A. (2009) Model selection for the mixed logit with Bayesian estimation. Journal of Environmental Economics and Management, 57 (2). pp. 226-237. ISSN 0095-0696 doi: 10.1016/j.jeem.2008.06.001

Abstract/Summary

In this paper, the mixed logit (ML) using Bayesian methods was employed to examine willingness-to-pay (WTP) to consume bread produced with reduced levels of pesticides so as to ameliorate environmental quality, from data generated by a choice experiment. Model comparison used the marginal likelihood, which is preferable for Bayesian model comparison and testing. Models containing constant and random parameters for a number of distributions were considered, along with models in ‘preference space’ and ‘WTP space’ as well as those allowing for misreporting. We found: strong support for the ML estimated in WTP space; little support for fixing the price coefficient a common practice advocated and adopted in the environmental economics literature; and, weak evidence for misreporting.