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Abstract
Data from a discrete choice experiment aimed at eliciting the demand for recreational
walking trails on farmland in the Republic of Ireland is used to explore the consequences of misspecifying the cost coefficient. To enable straightforward
calculation of WTP from the distributions of the non-price coefficients, the price
coefficient is typically held constant in mixed logit models. This implies that all
respondents are equally price sensitive. In this paper we test the validity of this
assumption. Our approach is based on a comparison and combination of discrete
and continuous mixing approaches (i.e., a mixture of distributions) to uncover
the unobserved heterogeneity in price sensitivities. Results from the analysis
highlight that model fit and willingness to pay are sensitive to the distributional
assumptions used to represent the price coefficient.