Design strategies for sequential choice experiments involving economic alternatives

Valuation is a fundamental task of government, for-profit, and not-for-profit business. A major subset of valuation issues concerns situations where decision alternatives may be described by benefits and costs and the objective is to infer the values respondents attach to benefit/cost levels. For studies of this sort, computer administration enables the course of data collection to depend on prior responses, which allows the study to adapt to responses made by subjects. This capability is very useful when the objective is to identify which coefficients to include in a model, e.g., whether to include interaction terms. A disadvantage of computer administration, however, is that presenting many alternatives in a single presentation may not be possible because limited screen real estate may sharply limit the number of attributes and alternatives that may appear in choice sets. This paper shows how attribute and attribute level sub-setting may be used to create choice sets for use in choice-based evaluation studies sequentially. Initially data are collected and the model fit tested for main effects. If main effects model gives a good fit, conclusions are drawn on main effects. Otherwise, more choice sets will be included, data are collected and the model fit tested for main effects and two-way interactions. If that model fits, conclusions are drawn on main effects and two-way interactions. Otherwise, more data collected with added choice sets and conclusions are drawn on main effects, two-way and three-way interactions.