Testing the assumption of compensatory decision-making in Discrete Choice Experiments: an application to the decommissioning of offshore oil installations

This paper examines the axiom of continuity in the context of a discrete choice experiment (DCE) where continuity implies compensatory decision-making. That is individuals are assumed to consider, and make trade-offs, between all attributes within choice sets. This assumption of compensatory decision-making is investigated through consideration of respondents’ trade offs when valuing alternative oil installation decommissioning policies. We test for the presence of non-trading preference structures. Choice patterns emerge consistent with always choosing according to the best level of a given attribute. When the choice patterns are analysed results indicate that 72% of respondents exhibited potential non-compensatory preferences. A number of factors influence this potentially noncompensatory behaviour including reported difficulty of the experiment and respondents’ socio-economic characteristics.