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on Discrete Choice Models |
| By: | Christopher Boyce (University of Stirling); Mikolaj Czajkowski (University of Warsaw); Nick Hanley (University of St Andrews); Charles Noussair (Tilburg University); Michael Townsend (NZ National Institute for Water and Atmosphere); Steve Tucker (University of Waikato) |
| Abstract: | This paper tests whether changes in 'incidental emotions' lead to changes in economic choices. Incidental emotions are experienced at the time of an economic decision but are not part of the payoff from a particular choice. As such, the standard economic model predicts that incidental emotions should not affect behavior, yet many papers in the behavioral science and psychology literatures find evidence of such effects. In this paper, we used a standard procedure to induce different incidental emotional states in respondents, and then carried out a choice experiment on changes to an environmental good (beach quality). We estimated preferences for this environmental good and willingness to pay for changes in this good, and tested whether these were dependent on the particular emotional state induced. We also tested whether choices became more or less random when emotional states were induced, based on the notion of randomness in a standard random utility model. Contrary to our a-priori hypothesis we found no significant evidence of treatment effects, implying that economists need not worry about the effects of variations in incidental emotions on preferences and the randomness of choice, even when there is measured (induced) variation in these emotions. |
| Keywords: | choice experiments; behavioral economics; ecosystem services; emotions; rationality |
| JEL: | Q51 Q57 D03 D87 |
| Date: | 2015–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:15/02&r=dcm |
| By: | Walter Beckert (Department of Economics, Mathematics & Statistics, Birkbeck) |
| Abstract: | This paper considers the micro-econometric analysis of discrete choice problems in which the choice set is strategically pre-selected by a third-party advisor or expert. It delineates measures of efficiency loss arising from (i) the sets of relevant choice attributes being imperfectly aligned between ultimate beneciary of the choice outcome and third-party expert, and (ii) pre-selected choice-sets being uniform across ultimate beneciaries who differ in their subjective evaluations of relevant choice attributes. And it identies inconsistencies in estimation when strategically pre-selected choice sets are treated as exogenous. Some applications to choice in healthcare and nancial services markets are sketched. |
| Keywords: | Discrete choice, expert, endogenous choice sets. |
| JEL: | D12 C51 I11 G11 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bbk:bbkefp:1503&r=dcm |
| By: | Francisco J. Bahamonde-Birke; Tibor Hanappi |
| Abstract: | This paper analyses the impact of the introduction of electromobility in Austria, focusing specifically on the potential demand for electric vehicles in the automotive market. We estimate discrete choice behavioral mixture models considering latent variables; these allows us to deal with this potential demand as well as to analyze the effect of different attributes of the alternatives over the potential market penetration. We find out that some usual assumptions regarding electromobilityalso hold for the Austrian market (e.g. proclivity of green-minded people and reluctance of older individuals), while others are only partially valid (e.g. the power of the engine is not relevant for purely electric vehicles). Along the same line, it was possible to establish that some policy incentives would have a positive effect over the demand for electrical cars, while others - such as an annual Park and Ride subscription or a one-year-ticket for public transportation - would not increase thewillingness-to-pay for electromobility. Our work suggests the existence of reliability thresholds, concerning the availability of charging stations. Finally this paper enunciates and successfully tests an alternative approach to address unreported information regarding income in presence of endogeneity and multiple information sources. |
| Keywords: | Electromobility, electric vehicles, Hybrid discrete choice model, latent variables, unreported income |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1472&r=dcm |
| By: | Francisco J. Bahamonde-Birke; Uwe Kunert; Heike Link; Juan de Dios Ortúzar |
| Abstract: | We provide an in-depth theoretical discussion about the differences between attitudes and perceptions, as well as an empirical exercise to analyze its effects. This discussion is of importance, as the large majority of papers considering attitudinal latent variables, just consider those as attributes affecting directly the utility of a certain alternative while systematic taste variations are rarely taken into account and perceptions are normally completely ignored. The results of our case study show that perceptions may indeed affect the decision making process and that they are able to capture a significant part of the variability that is normally explained by alternative specific constants. In the same line, our results indicate that attitudes may be a reason for systematic taste variations, and that a proper categorization of the latent variables, in accordance with the underlying theory, may outperform the customary assumption of linearity. |
| Keywords: | Hybrid Discrete Choice Modelling, Latent Variables, Attitudes, Perceptions |
| JEL: | C50 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1474&r=dcm |
| By: | Patrick Bajari; Victor Chernozhukov; Han Hong; Denis Nekipelov |
| Abstract: | In this paper, we study the identification and estimation of a dynamic discrete game allowing for discrete or continuous state variables. We first provide a general nonparametric identification result under the imposition of an exclusion restriction on agent payoffs. Next we analyze large sample statistical properties of nonparametric and semiparametric estimators for the econometric dynamic game model. We also show how to achieve semiparametric efficiency of dynamic discrete choice models using a sieve based conditional moment framework. Numerical simulations are used to demonstrate the finite sample properties of the dynamic game estimators. An empirical application to the dynamic demand of the potato chip market shows that this technique can provide a useful tool to distinguish long term demand from short term demand by heterogeneous consumers. |
| JEL: | C01 C14 C7 C73 L0 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21125&r=dcm |
| By: | Francesco Bartolucci; Aleksandra Baschina; Giovanni S. F. Bruno; Olga Demidova; Marcello Signorelli (-) |
| Abstract: | A growing economic literature regards the analysis of job satisfaction; however, as for young people the investigations are still scarce. In this paper we analyse job satisfaction among Russian young workers by using the data collected for four items, the first of which concerns the general satisfaction about the job; the other three items concern specific aspects of job satisfaction with respect to work condition, earning, and opportunity for professional growth. The corresponding response variables are categorical with five ordered categories, from “absolutely unsatisfied” to “absolutely satisfied”. The longitudinal dataset also contains personal information about the respondents (gender, age, marital status, number of children, educational level, etc.). We estimate ordered logit models of job satisfaction with individual fixed effects for a panel data of Russian young workers, carrying out separate analyses for the general job satisfaction variable and three variables on specific aspects of job satisfaction. If wages adjusted to fully compensate workplace disamenities, we would expect that differences in job satisfaction across individuals would not be systematically related to wage differentials, ceteris paribus. But this is not the case for our panel: for all but one of the samples considered there is at least one job satisfaction variable with a significantly positive wage effect. We, therefore, interpret this result as a failure of the theory of compensating wage differentials in the Russian youth labour market. There is the interesting exception, though, that compensating wage differentials do seem at work among the older subjects in the panel. Our estimates also show strong gender and location effects. |
| Keywords: | job satisfaction, young people, Russia |
| JEL: | J28 J81 |
| Date: | 2015–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:crj:dpaper:7_2015&r=dcm |
| By: | Nicolao Bonini; Stefania Pighin; Enrico Rettore; Lucia Savadori; Federico Schena; Sara Tonini; Paolo Tosi |
| Abstract: | Overconfidence is a well-established bias in which someone's subjective confidence in their own judgments is systematically greater than their objective accuracy. There is abundant anecdotal evidence that overconfident people increase their exposure to risk. In this paper, we test whether overconfident people underestimate the probability of incurring an avalanche accident. An avalanche accident is a typical "black swan" event because it has a low probability of occurring but has potential dramatic consequences. To test whether the overconfidence bias affects the decision of backcountry skiers to go on a ski trip under different levels of avalanche risk, we measured individual cognitive traits and then used a random effect logit model to measure their effects on the probability to take the tour, by controlling for other observable characteristics of the respondent. We show that 1) overconfidence is widespread even in our sample and 2) practitioners who are more prone to overestimate their knowledge are also more likely to take the risk associated with a ski trip exposed to avalanche danger. This suggests that overconfident people are more exposed to black swan events. |
| Keywords: | Cognitive bias, Risky decision, Backcountry skiing, Measurement errors, Logit model |
| JEL: | D83 D84 C2 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:fbk:wpaper:2015-02&r=dcm |