Development and estimation of a semi-compensatory model incorporating multinomial and ordered-response thresholds.

Semi-compensatory models represent a two-stage choice process consisting of an elimination-based choice set formation upon satisfying criteria thresholds and a utility-based choice. Current semi-compensatory models assume a purely non-compensatory choice set formation and hence do not support multinomial criteria that involve trade-offs among attributes at the choice set formation stage. This study proposes the development and estimation of a semi-compensatory model that incorporates both multinomial-response and ordered-response criteria. The model development includes the proposition of a novel behavioural paradigm which involves a hybrid compensatory non-compensatory choice set formation process, followed by compensatory choice. The behavioural paradigm is represented by a mathematical model that accommodates a combination of multinomialresponse and ordered-response thresholds and a utility-based choice. The proposed semicompensatory model is applied to a stated preference experiment of off-campus rental apartment choices by students. Results demonstrate the applicability and feasibility of incorporating multinomial-response thresholds into the semi-compensatory framework.
Keyword: simplification by aggregation, multinomial cut-offs, two-stage model