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Abstract
Economic theory, as well as intuition, supports the notion of increasing or decreasing marginal rates of substitution. That is, the marginal benefit derived from an increase in a desired good or service, or one's willingness to accept tradeoffs among various costs or' benefits, depends on the current mix or allocation. However, due to widespread availability and ease of use, linear models are frequently used to model preference structure for environmental goods or services. This paper presents an approach for estimating nonlinear effects and contrasts the results with those of linear models. The effects on the optimal choice in multiattribute decisions and acceptability of tradeoffs among costs and benefits are highlighted.
Parent Publication
Citation
Dennis, Donald F. 2002. Modeling nonlinear preferences. In: Todd, Sharon, comp., ed. 2002. Proceedings of the 2001 Northeastern Recreation Research Symposium. Gen. Tech. Rep. NE-289. Newtown Square, PA: U.S. Department of Agriculture, Forest Service, Northeastern Research Station. 275-278.
