Technical Note—Factors Influencing the Selection of Preference Model Form for Continuous Utility Functions in Conjoint Analysis

Abstract

In conjoint analysis, a consumer's utility function for a continuous attribute is usually estimated using a part worth function. However, one may also use continuous functions. The purpose of the paper is to investigate through simulation the combined influence of the number of degrees of freedom, the nature of the “true” utility function and the amount of error in the data on the selection of a utility function. The focus is on functions that are known or expected to be monotone within the range of attribute levels of interest. One can then choose among linear, quadratic and part worth functions. The results show (a) that estimation procedures with monotonicity constraints should be used, and (b) that it is best to use quadratic or part worth functions rather than linear functions to minimize potential losses in predictive validity.