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on Discrete Choice Models |
| By: | Enni Roukamo (Department of Economics, Oulu Business School, University of Oulu, Finland); Mikolaj Czajkowski (University of Warsaw, Department of Economics, Poland); Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews); A. Juutinen (Department of Economics, Oulu Business School, University of Oulu, Finland); R. Svento (Department of Economics, Oulu Business School, University of Oulu, Finland) |
| Abstract: | Choosing a specific heating system is a complex and difficult decision for homeowners as there exists a wide array of heating technologies with different characteristics that one can consider before purchasing. We include multiple heating technologies and attributes in our Choice Experiment design and explore the effect of perceived choice complexity on the randomness of choices. In particular, we investigate how different self-evaluated factors of choice complexity affect mean scale and scale variance. Our findings suggest that perceived choice complexity has a systematic impact on the parameters of econometric models of choice. However, there are differences between alternative selfevaluated complexity-related covariates. Results indicate that individuals who report that answering the choice tasks was difficult have less deterministic choices. Perceptions of the realism of home heating choice options also affect scale and scale variance. |
| Keywords: | Home heating, Choice experiment, Choice modelling, Scale heterogeneity, Generalized mixed logit, Complexity |
| JEL: | D12 Q40 Q48 Q51 Q55 |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:sss:wpaper:2016-16&r=dcm |
| By: | Anna Alberini (University of Maryland, FEEM and Centre for Energy Policy and Economics, ETH Zürich); Milan Šcasný (Charles University Environment Center); Andrea Bigano (FEEM, CMCC and Far East Federal University) |
| Abstract: | The implementation of decarbonization policies depends crucially on the public’s willingness to pay for them. We use stated preference methods to investigate the public’s preferences for such policies. We ask three research questions. First, does the willingness to pay (WTP) for each ton of CO2 emissions reductions depend on the policies and on individual characteristics of the respondents? Second, how extensive is the variation associated with these factors? Third, what factors affect support for or opposition to a carbon tax? Based on the responses to discrete choice experiments from a sample of Italians, we find that the WTP per ton of CO2 ranges between € 6 and 130, depending on whether the public program is based on taxes, incentives, information-based approaches or standards. Further allowing for individual characteristics of the respondents, such as gender or education, and knowledge of climate change, results in a 300% change in WTP, holding the policy instrument the same. We conclude that the variation associated with the policy instrument is approximately of the same order of magnitude as that associated with individual characteristics of the respondents. |
| Keywords: | Climate Change Mitigation, WTP per ton of CO2 Emissions Reduced, Choice Experiments |
| JEL: | Q41 Q48 Q54 Q51 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2016.80&r=dcm |
| By: | Czajkowski, Mikołaj; Sobolewski, Maciej |
| Abstract: | Recent theoretical models of network competition with call externalities demonstrate strategic incentives of incumbent providers to reduce receiver benefits in rival network by excessive off-net pricing. Such anti-competitive pricing practices have a potentially damaging impact on financial standing of a late entrant, leading to non-convergence of long-run market shares – an outcome that has been observed in many European mobile markets. The theoretical reasoning behind call externalities assumes that receiving calls contribute to consumer utility hence, receiver benefits drive subscription choices. So far no attempts have been made to test this critical assumption in a rigorous manner. We use data elicited from prepaid and postpaid users of mobile telephony in Poland in a discrete choice experiment designed specifically to model subscription choices when operators set termination-based discriminatory tariffs under calling party pays regime. Receiver benefits are controlled with an incoming price – a variable informing about the cost of off-net calls paid by subscribers originating a call from other networks. The model also accounts for switching costs and network effects. We find that call externalities are significant driver of subscription choices, albeit their influence has smaller magnitude than direct price effects. Next, we assess the impact of excessive off-net pricing on the structure of market shares of mobile operators in Poland and estimate customer base stealing effect encountered by the late entrant. Our empirical findings support a widespread view that call externalities might have indeed limited market competition and late entrants' growth in many European countries. |
| Keywords: | Call externalities,personal network effects,switching costs,mobile telephony,stated preference,discrete choice experiment,random parameters logit model |
| JEL: | L1 L86 O3 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse16:148706&r=dcm |
| By: | Nick Hanley (University of St Andrews, School of Geography and Geosciences); Mikołaj Czajkowski (Faculty of Economic Sciences, University of Warsaw) |
| Abstract: | We examine the value of Stated Preference (SP) valuation methods as part of the environmental economist’s toolbox. We review a number of policy design issues where we believe SP methods have advantages over alternative approaches. We also discuss the role of SP methods in exploring a few aspects of peoples’ preferences and values which have wider implications for economics and behavioral sciences: (a) the effects of information, learning and knowledge; (b) testing the standard model of compensatory, rational choice; (c) the influence of behavioural levers such as social norms; and (d) the role of “deep” drivers of preference heterogeneity, such as personality and emotions. We also review what is known about the extent to which hypothetical choices reveal something about people’s true preferences. Finally, we speculate on some areas where SP methods may be useful in the future. |
| Keywords: | stated preferences, non-market valuation, environmental economics methods, information, choice, social norms, preference heterogeneity |
| JEL: | Q51 D6 H4 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:war:wpaper:2017-01&r=dcm |
| By: | Petulowa, Marc; Liang, Julienne |
| Abstract: | Mobile-only users are usually considered as a consequence of fixed-mobile substitution. Via a unique dataset based on a a large European country survey and consumers' invoice data, this study reveals heterogeneous preferences for fixed services among consumers. The data is fitted in a mixed logit model and willingness to pay (WTP) for fixed communications services are estimated. Results show that mobile-only consumers have a WTP for fixed services of 15 € per month, while the WTP of users of both fixed and mobile services is thrice higher. Considering that a typical monthly fee for fixed services is around 30 € the heterogeneous preferences for fixed services constitute an alternative explanation for the existence of mobile-only users, despite the complementarity of fixed and mobile broadband. |
| Keywords: | fixed mobile dependence,heterogeneous preferences,substitution versus complementarity,mobile only |
| JEL: | L43 L50 L96 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:itse16:148699&r=dcm |
| By: | Nick Hanley (School of Geography and Sustainable Development, University of St. Andrews); Mikolaj Czajkowski (University of Warsaw, Department of Economics, Poland) |
| Abstract: | We examine the value of Stated Preference (SP) valuation methods as part of the environmental economist’s toolbox.We review a number of policy design issues where we believe SP methods have advantages over alternative approaches. We also discuss the role of SP methods in exploring aspects of peoples’ preferences and values which have wider implications for economics and behavioral sciences: (a) the effects of information, learning and knowledge; (b) testing the standard model of compensatory, rational choice; (c) the influence of behavioural levers such as social norms; and (d) the role of “deep” drivers of preference heterogeneity, such as personality and emotions. We also review what is known about the extent to which hypothetical choices reveal something about people’s true preferences. Finally, we speculate on some areas where SP methods may be useful in the future. |
| Keywords: | stated preferences, non-market valuation, environmental economics methods, information, choice, social norms, preference heterogeneity |
| JEL: | Q51 D6 H4 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:sss:wpaper:2017-01&r=dcm |
| By: | Johannes Rode; Sven Müller |
| Abstract: | We study spatio-temporal variation of peer effects in rooftop photovoltaics adoption of households. Our investigation employs locational data on potential adopters and a geocoded data set of all grid-connected photovoltaic systems set up in Germany through 2010. The detailed locational data allows us to construct an individual measure of peer effects for each potential adopter across Germany. Based on a discrete choice model with panel data, our analysis reveals that peer effects are mostly localized within a range of 0-0.2 km. Within this range they deflate slowly in a non-linear manner. We also find that the peer effect decreases over time. |
| Keywords: | Peer effects; installed base; discrete choice models; technology adoption; imitation; photovoltaics; solar; Germany |
| JEL: | O33 C35 Q55 R10 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa16p579&r=dcm |
| By: | Syrengelas, Konstantinos; Lewis, Karen Elizabeth; Grebitus, Carola; Nayga, Rodolfo M. Jr |
| Abstract: | The FDA received petitions to more clearly define the content of the natural label or even prohibit its use. Against this background, we conducted an online choice experiment to determine consumer preferences for boneless USDA Choice ribeye steaks. We also determined if providing consumers with information regarding the legal definition of natural had an impact on consumer preferences. Results indicate that natural labeling has a positive impact on consumer utility when consumers were not aware of the definition of natural; this impact was not found when consumers were informed of the definition of natural. |
| Keywords: | Beef, interaction design, natural labeling, random parameters logit, Agricultural and Food Policy, Consumer/Household Economics, Marketing, M31, M38, |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea17:251926&r=dcm |
| By: | Susanna Gallani (Harvard Business School, Accounting and Management Unit); Ranjani Krishnan (Eli Broad School of Management, Michigan State University) |
| Abstract: | Survey research studies make extensive use of rating scales to measure constructs of interest. The bounded nature of such scales presents econometric estimation challenges. Linear estimation methods (e.g. OLS) often produce predicted values that lie outside the rating scales, and fail to account for nonconstant effects of the predictors. Established nonlinear approaches such as logit and probit transformations attenuate many shortcomings of linear methods. However, these nonlinear approaches are challenged by corner solutions, for which they require ad hoc transformations. Censored and truncated regressions alter the composition of the sample, while Tobit methods rely on distributional assumptions that are frequently not reflected in survey data, especially when observations fall at one extreme of the scale owing to surveyor and respondent characteristics. The fractional response model (FRM) (Papke and Wooldridge 1996, 2008) overcomes many limitations of established linear and non-linear econometric solutions in the study of bounded data. In this study, we first review the econometric characteristics of the FRM and discuss its applicability to survey-based studies in accounting. Second, we present results from Monte Carlo simulations to highlight the advantages of using the FRM relative to conventional models. Finally, we use data from a hospital patient satisfaction survey, compare the estimation results from a traditional OLS method and the FRM, and conclude that the FRM provides an improved methodological approach to the study of bounded dependent variables. |
| Keywords: | Fractional response model, bounded variables, simulation |
| JEL: | C23 C24 C25 C15 I18 M41 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:hbs:wpaper:16-016&r=dcm |