Estimation and Analysis of Preference Heterogeneity in Residential Choice Behaviour

Abstract

Effective and efficient planning and development of residential environments require clarifying the nature of residential preferences. In reality, residential preferences are heterogeneous, so the standard econometric models that assume only one type of preference are not optimal. In this study, conjoint choice experiment methods are employed with a mixed logit approach. The findings reveal significant heterogeneity with regard to some residential attributes. The determinants of preference heterogeneity were also investigated by conducting regression analyses on the attributes that were valued heterogeneously. Overall, the relationships observed between the explanatory variables and the heterogeneity in the valuations were understandable. However, coefficient of determination values for each model were low, indicating that the bulk of preference heterogeneity results from unobservable factors.

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