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on Discrete Choice Models |
| By: | Hannah Krovetz; Rebecca Taylor; Sofia Villas-Boas |
| Abstract: | In the context of recent California drought years, we investigate empirically whether consumers are willing to pay for more efficient water usage in the production of four California agricultural products. We implement an internet survey choice experiment for avocados, almonds, lettuce, and tomatoes to elicit consumer valuation for water efficiency via revealed choices. We estimate a model of consumer choices where a product is defined as a bundle of three attributes: price, production method (conventional or organic), and water usage (average or efficient). Varying the attribute space presented to consumers in the experimental choice design gives us the data variation to estimate a discrete choice model—both conditional logit specifications and random coefficient mixed logit specifications. We find that on average consumers have a significant positive marginal utility towards water-efficiency and estimate that there is an implied positive willingness to pay (WTP) of about 12 cents per gallon of water saved on average. Moreover, informing consumers about the drought severity increases the WTP for low water footprint options, but not significantly. We find that there is heterogeneity in the WTP along respondents' education, race, and also with respect to stated environmental concern. Our findings have policy implications in that they suggest there to be a market based potential to nudge consumers who want to decrease their water footprint and follow a more sustainable diet, namely, by revealing information on the product's water footprint in a form of a label. Simulations of removing low water footprint labels from the choice set attributes imply significant consumer surplus losses, especially for the more educated, white, and more environmentally concerned respondents. |
| JEL: | Q18 Q25 Q54 Q51 Q21 M30 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23495&r=dcm |
| By: | Mogens Fosgerau (DTU - Technical University of Denmark [Lyngby]); André De Palma (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We formulate a family of direct utility functions for the consumption of a differentiated good. This family is based on a generalization of the Shan-non entropy. It includes dual representations of all additive random utility discrete choice models, as well as models in which goods are complements. Demand models for market shares can be estimated by plain regression, enabling the use of instrumental variables. Models for microdata can be estimated by maximum likelihood. |
| Keywords: | market shares,product differentiation,discrete choice,duality,generalized entropy , C25, L1 |
| Date: | 2016–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-01291347&r=dcm |
| By: | André De Palma (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stef Proost (Department of Economics, KU Leuven); Ravi Seshadri (Singapore-MIT Alliance for Research and Technology (SMART) Centre); Moshe Ben-Akiva (MIT - Massachusetts Institute of Technology) |
| Abstract: | To address traffic congestion, two categories of instruments are used: price regulation (for instance, road pricing or congestion tolling) and quantity regulation (credit-based mobility schemes). Although the comparison of price and quantity regulation has received significant attention in the economics community, the literature is relatively sparse in the context of transportation systems. This paper develops a methodology to compare the toll and mobility permit instruments using a simple transportation network consisting of parallel highway routes and a public transport alternative. The permits can be traded across roads. The demand for each route is determined by a mixed logit route choice model and the supply consists of static congestion. The comparison is based on the optimum social welfare which is computed for each instrument by solving a non-convex optimization problem involving the mixed logit equilibrium constraints. Equity considerations are also examined. Numerical experiments conducted across a wide range of demand/supply inputs indicate that the toll and mobility permit instruments perform very closely in efficiency terms. The permit system is on average more efficient, but only by a small margin. |
| Keywords: | Social Welfare, Mixed Logit,Tolls, Mobility Permits, Equity, Stochastic Demand |
| Date: | 2016–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-01397582&r=dcm |
| By: | Breitmoser, Yves (Humboldt University Berlin) |
| Abstract: | Experimenters have to make theoretically irrelevant decisions concerning user interfaces and ordering or labeling of options. Such presentation decisions affect behavior and cause results to appear contradictory across experiments, obstructing utility estimation and policy recommendations. The present paper derives a model of choice allowing analysts to control for both presentation effects and stochastic errors in econometric analyses. I test the model in a comprehensive re-analysis of dictator game experiments. Controlling for presentation effects, preference estimates are consistent across experiments and predictive out-of-sample, highlighting the fundamental role of presentation for choice, and this notwithstanding the possibility of reliable estimation and prediction. |
| Keywords: | discrete choice; presentation effects; utility estimation; counterfactual predictions; laboratory experiment; |
| JEL: | C10 C90 |
| Date: | 2017–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:35&r=dcm |