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Choice Experiments

Marie von Meyer-Höfer and Peter Elsasser | 29.06.2022

MA Institute of Market Analysis
WF Institute of Forestry

Choice Experiments can be used to determine how much a certain good is worth to people and how the individual properties of this good influence this value. This works just as well for products that are traded on markets as for environmental goods for which there are no markets.

The data needed for this is usually obtained through specially designed surveys in which customers (or representatively selected citizens) are asked to choose between differently designed products. The answers can then be analysed by statistical methods in order to identify how important the various characteristics of the product are to a customer in comparison to each other.

If one of the product characteristics is the price of the product, then it is also possible to derive the willingness to pay for all product characteristics in this way - one of the best ways to also determine the value of environmental services, for which no one has to pay anywhere. Such surveys can be structured in different ways.

Example Choice Experiment

Here is an example of a choice experiment in which a choice had to be made from four possible product alternatives for chicken breast fillets: the experiment was about determining how much the willingness to pay differs when buyers can choose between conventional and organic farming, different regions of origin and different chicken breeds - and, of course, what role the price plays in the purchase. 

For us as scientists, the goal of a Choice Experiment is on the one hand to find out which product characteristics are particularly important, and on the other hand to make statements about which products citizens would be most likely to choose. For this purpose, we have various calculation models at our disposal. Depending on the model, for example, different buyer groups can be identified and/or probabilities for product purchase can be calculated.

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