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Definition

A discrete choice model predicts a decision made by an individual (choice of mode, choice of route, etc.) as a function of any number of variables, including factors that describe a bicycle or pedestrian facility improvement or policy change. The model can be used to estimate the total number of people who change their behavior in response to an action. As a result, the change in both non-motorized and motorized trips and distance of travel can be estimated. The model can also be used to derive elasticities, i.e., the percent change in bicycle or pedestrian travel in response to a given change in any particular variable.

Application

Pricing decisions

New product or service development

Market segmentation

Drivers of choice

Why DCM, not conjoint

 1. Discrete choice allows for the interaction effects among the levels of attributes, which is particularly useful in the estimation of price elasticity such as the interaction of brand by price.

 2. Discrete choice experiment doesn’t force physicians to prescribe a product upon seeing profiles of products.

 3. A discrete choice study asks respondents to make a choice among the alternatives presented to them, which is one step closer to reality than the preference ratings in a conjoint experiment.

 4. Technically, Discrete choice uses the multinomial logit model, which applies the nonlinear model to estimate utilities at an aggregate level, whereas conjoint analysis applies a linear model to estimate utilities at an individual level. More about this later.

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