HABIT FORMATION AND VARIETY SEEKING IN A DISCRETE CHOICE MODEL OF RECREATION DEMAND

The recreational site choice decision modeled in most economic analyses seldom contains previous experience with the site as a characteristic or attribute. A rational dynamic model is used to incorporate previous experience with the site in a model of the choice of recreation sites. Based on the comparison of dynamic and static models, it is apparent that dynamic elements influence choice. The use of previous consumption as an attribute (either in a naïve or rational form) is an improvement over static models of choice. In welfare analysis, this effect may be a significant factor. For example, a change in prices or quality attributes may have a much larger impact on those individuals who have developed habits.