Using Random Parameters to Account for Heterogeneous Preferences in Contingent Valuation of Public Open Space

To test for preference heterogeneity in dichotomous choice contingent valuation responses, a random parameter logit (RPL) specification is used in this analysis. The RPL model confirms heterogeneity in respondents' preferences for protection of public open space, as reflected in statistically significant standard deviations of the normally distributed random parameters. Results show that while the majority of respondents indicate a positive willingness to pay (WTP), a minority of those surveyed report a negative WTP. Some of this variation in tastes remains even after individual characteristics and attitudinal variables are included in the model.
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Nahuelhual, Laura; Loureiro, Maria L.; Loomis, John B., Using Random Parameters to Account for Heterogeneous Preferences in Contingent Valuation of Public Open Space, Journal of Agricultural and Resource Economics, Volume 29, Issue 3, December 2004, Pages 537–552

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