Hypothetical bias and decision-rule effect in modelling discrete directional choices

Abstract

Introduction: This empirical study investigates, in parallel, two key questions in relation with modelling discrete choices. (i) To what extent econometric modelling estimates and predictions derived from responses to hypothetical choice scenarios differ from those of an equivalent realistic choice context (i.e. hypothetical bias)? (ii) To what extent econometric modelling estimates and predictions differ as a result of postulating “regret minimisation” as the decision rule as opposed to the “utility maximisation” assumption (i.e. decision-rule effect)? The magnitude of these two effects are also compared relatively. Methods: We explore the two aforementioned problems in the context of discr..