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on Discrete Choice Models |
| By: | Jason Abaluck; Abi Adams |
| Abstract: | Consideration set models relax the assumption that consumers are aware of all available options. Thus far, identification arguments for these models have relied either on auxiliary data on what options were considered or on instruments excluded from consideration or utility. In a discrete choice framework subsuming logit, probit and random coefficients models, we prove that utility and consideration set probabilities can be separately identified without these data intensive methods. In full-consideration models, choice probabilities satisfy a symmetry property analogous to Slutsky symmetry in continuous choice models. This symmetry breaks down in consideration set models when changes in characteristics perturb consideration, and we show that consideration probabilities are constructively identified from the resulting asymmetries. In a lab experiment, we recover preferences and consideration probabilities using only data on which items were ultimately chosen, and we apply the model to study hotel choices on Expedia.com and insurance choices in Medicare Part D. |
| JEL: | D0 D8 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23566&r=dcm |
| By: | José Manuel Montero (Banco de España and Universidad Complutense de Madrid) |
| Abstract: | I test the predictions from Duca, Montero, Riggi and Zizza (2017), who develop a customermarket model with consumer switching costs and capital-market imperfections in which price-cost markups behave countercyclically, with a subsample of European firms participating in the Wage Dynamics Network 2014 survey. I use a novel empirical approach developed by Aakvik, Heckman and Vytlacil (2005) for estimating discrete choice models with binary endogenous regressors that allows for selection on unobservables. Results show that firms subject to financial constraints had a significantly higher probability of raising markups than in a counterfactual scenario without such constraints. Moreover, the estimated partial effects for the main variables are in overall accordance with the predictions from the theoretical model. |
| Keywords: | markups, financial frictions, customer market, discrete-choice models |
| JEL: | C25 C26 D22 L11 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:1724&r=dcm |
| By: | Lammers, Marloes (Vrije Universiteit Amsterdam); Bloemen, Hans (Vrije Universiteit Amsterdam); Hochguertel, Stefan (Vrije Universiteit Amsterdam) |
| Abstract: | This paper makes use of a natural experiment to examine effects of potential capital losses and general attractiveness of pension schemes on employees' propensity to change jobs. On January 1st 2004, the two largest pension funds in the Netherlands, for civil servants and for the health care sector, changed their pension scheme from a final salary to an average salary. This industry-level change excludes the possibility that a negative correlation between having a job with an attractive pension scheme and the number of labour market transitions is driven by self-selection of workers into jobs with an attractive pension arrangement. Using individual data covering the entire Dutch population, we estimate discrete choice models for job-to-job transitions. The results show that the number of job transitions of civil servants significantly increased at the onset of the new pension rules. The changing pension rules affected the propensity to change jobs for individuals working in the health care sector only to a smaller extent. |
| Keywords: | discrete choice models, policy evaluation, labour market flexibility, pension systems |
| JEL: | C35 J26 J32 J63 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10840&r=dcm |