Similar individuals facing the same set of choices often make different choices
نویسنده
چکیده
This paper explores the classic distinction between state dependence and heterogeneity in repeated decisions. Specifically, it combines a Mixed Multinomial Logit model with a state dependence parameterization from the marketing literature on brand loyalty to study repeated fishing location choices of commercial sea urchin divers in California. The econometric model relies on simulation-based estimation. A surprising result emerges about the preference heterogeneity in the fleet; random preference parameters are statistically significant when state dependence is excluded from the model, but when it is included, behavioral responsiveness to economic variables appears more homogeneous in the fleet. A Monte Carlo study demonstrates how apparently spurious preference heterogeneity could arise in this setting as a result of autocorrelated catch rates. Implications for similar choice problems in recreation demand are discussed.
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