Residential location preferences and relative power in three member households: a choice experiment

Microeconomics studies group behaviour by using the unitary model. However, there is growing evidence that there can be significant differences between choices made by single individuals and those made by the same individuals when choosing collectively. This study investigates the differences between individual and joint decision-making in the context of residential location choice. It is widely recognized that household location choices involve several members of a household with heterogeneous preferences and influence power. Nonetheless little is known about group decision-making processes in practice. In particular, there is only scant evidence on how preferences differ among family members and to what extent individual preferences can be aggregated to achieve an approximation of joint choices. The study evaluates whether there are differences in single members’ preferences. Furthermore, relative power is inferred by measuring similarity between ex ante single preferences and ex post joint choice outcomes. We also quantify the implicit bias generated by relying on the unitary household approach. These issues are tested by employing a two-stage conjoint choice experiment administered to a sample of 53 Italian families. This work proposes a novel extension of the commonly used dyadic interaction approach to consider the role of adolescents in household decision-making.