The MaxDiff is a long-established academic mathematical theory with very specific assumptions about how people make choices: it assumes that respondents evaluate all possible pairs of items within the displayed set and choose the pair that reflects the maximum difference in preference or importance. it may be thought of as a variation of the method of Paired Comparisons. Consider a set in which a respondent evaluates four items: A, B, C and D. If the respondent says that A is best and D is worst, these two responses inform us on five of six possible implied paired comparisons:
The only paired comparison that cannot be inferred is B vs. C. In a choice among five items, MaxDiff questioning informs on seven of ten implied paired comparisons.
Maxdiff and best-worst scaling (BWS) have erroneously been considered synonyms. Respondents can produce best-worst data in any of a number of ways, with a maxdiff process being but one. Instead of evaluating all possible pairs (the maxdiff model), they might choose the best from n items, the worst from the remaining n-1, or vice versa (sequential models). Or indeed they may use another method entirely. Thus it should be clear that maxdiff is a subset of BWS; maxdiff is BWS, but BWS is not necessarily maxdiff. Indeed, maxdiff might not be considered an attractive model on psychological and intuitive grounds: as the number of items increases, the number of possible pairs increases in a multiplicative fashion: n items produces n(n-1) pairs (where best-worst order matters). Assuming respondents do evaluate all possible pairs is a strong assumption. Early work did use the term maxdiff to refer to BWS, but with Marley's return to the field, correct academic terminology has been disseminated throughout Europe and Asia-Pacific.
In North America the term maxdiff continues to be used for studies that are in fact BWS studies. This probably reflects the fact that Sawtooth Software in the United States implements a procedure it has named maxdiff. Indeed, it is unclear whether this procedure implements maxdiff procedures in estimating parameters of their models, or whether the simpler, sequential BWS model is used.
A maxdiff survey may be designed and analysed in two ways:
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