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on Discrete Choice Models |
| By: | Faical Akaichi; Joan Costa-Font; Richard Frank |
| Abstract: | We examine evidence from two unique discrete choice experiments (DCE) on long term care insurance and several of its relevant attributes, and more specifically, choices made by 15,298 individuals in the United States with and without insurance. We study the valuation of the following insurance attributes, namely daily insurance benefit, insurance coverage, the compulsory and voluntary nature of the insurance policy design, alongside the costs (insurance premium) and health requirements. This paper investigates respondents’ preferences and willingness to pay (WTP) for these care insurance’s attributes using a random parameter logit model, and assess the heterogeneity of choice responses using demographic, socioeconomic and attitudinal motivations to segment response to insurance choices. We find that an increase in the insurance premium by an additional $100 would reduce insurance uptake by 1pp. Insurance policy uptake is higher when it provides benefits for the lifetime (the monthly marginal WTP being $178.64), and voluntary (the monthly marginal WTP increases by an extra $74.71) as opposed to universal, and when it forgoes health checks (the monthly marginal WTP increases by an extra 28US$). |
| JEL: | I13 I18 I31 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26118&r=all |
| By: | Schleich, Joachim; Faure, Corinne; Guetlein, Marie-Charlotte; Tu, Gengyang |
| Abstract: | Conveyance, i.e., the fact that an appliance purchased will be left in the dwelling when moving out, may lead homeowners to purchase appliances of lower quality or performance, because the extra costs are not entirely capitalized into the house sales price. Employing a discrete choice experiment with homeown-ers in the United States, this paper explores the effects of conveyance on homeowners' willingness-to-pay for various attributes of refrigerators. To ac-count for the social nature of purchases when conveyance is likely to occur, it also tests the moderating role of envy (elicited through an incentivized game). The findings suggest that conveyors are more likely to purchase a smaller re-frigerator, from a less well-known brand, and with lower customer ratings. In contrast, conveyance was not found to affect homeowners' choices when it comes to energy cost. In addition, envy was found to generally reinforce the negative effects of conveyance on homeowners' willingness-to-pay for quality and performance attributes. While conveyance and its interaction with envy help explain homeowners' choice of quality/performance attributes of applianc-es, these factors do not appear to explain the energy efficiency paradox. |
| Keywords: | energy efficiency paradox,conveyance,envy,choice experiment |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisisi:s062019&r=all |
| By: | Ningyuan Chen; Guillermo Gallego; Zhuodong Tang |
| Abstract: | We show the equivalence of discrete choice models and the class of binary choice forests, which are random forest based on binary choice trees. This suggests that standard machine learning techniques based on random forest can serve to estimate discrete choice model with an interpretable output. This is confirmed by our data driven result that states that random forest can accurately predict the choice probability of any discrete choice model. Our framework has unique advantages: it can capture behavioral patterns such as irrationality or sequential searches; it handles nonstandard formats of training data that result from aggregation; it can measure product importance based on how frequently a random customer would make decisions depending on the presence of the product; it can also incorporate price information. Our numerical results show that binary choice forest can outperform the best parametric models with much better computational times. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1908.01109&r=all |
| By: | Misha Perepelitsa |
| Abstract: | A family of models of individual discrete choice are constructed by means of statistical averaging of choices made by a subject in a reinforcement learning process, where the subject has short, k-term memory span. The choice probabilities in these models combine in a non-trivial, non-linear way the initial learning bias and the experience gained through learning. The properties of such models are discussed and, in particular, it is shown that probabilities deviate from Luce's Choice Axiom, even if the initial bias adheres to it. Moreover, we shown that the latter property is recovered as the memory span becomes large. Two applications in utility theory are considered. In the first, we use the discrete choice model to generate binary preference relation on simple lotteries. We show that the preferences violate transitivity and independence axioms of expected utility theory. Furthermore, we establish the dependence of the preferences on frames, with risk aversion for gains, and risk seeking for losses. Based on these findings we propose next a parametric model of choice based on the probability maximization principle, as a model for deviations from expected utility principle. To illustrate the approach we apply it to the classical problem of demand for insurance. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1908.06133&r=all |
| By: | Debora Giovannelli |
| Abstract: | Data coming back from a brand survey have been analysed by a regression model for nominal outcomes, also known as the Multinomial Logit Model. The Multinomial Logit Model (MNLM) belongs to a multivariate version of Generalized Linear Models (GLM), a class of models popularized by McCullagh and Nelder (1982) and widely used in many different fields (Social Sciences, Biomedical Sciences, Epidemiology, Public Health, Genetic, Zoology, Education, but also Marketing Researches, Survey Analysis and Product/Process/Service Quality Control). The interpretation of these regression models requires a background knowledge that is not always common, especially in business application fields. Data must be “readable” to anyone who has the responsibility to take serious decision, which can strongly influence not only the business of a company but also the safety and the quality of its products/processes and services. The scope of this presentation is to show and highlight the advantages of the implementation of Spost13 commands, setup by J. Scott Long and J. Freese, as very useful tools for making easier the interpretation of results coming from the implementation of this regression model for nominal response variables. |
| Date: | 2019–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:boc:scon19:38&r=all |
| By: | Sun, Shan; Hu, Wuyang; Qing, Ping |
| Keywords: | Marketing |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290875&r=all |
| By: | Matthew Masten (Duke University); Alexandre Poirier (Georgetown University) |
| Abstract: | This talk will discuss a new set of methods for quantifying the robustness of treatment effects estimated under the unconfoundedness assumption (also known as selection on observables or conditional ignorability). Specifically, we estimate bounds on the ATE, the ATT, and the QTE under nonparametric relaxations of unconfoundedness indexed by a scalar sensitivity parameter c. These deviations allow for limited selection on unobservables, depending on the value of c. For large enough c, these bounds equal the no assumptions bounds. Our methods allow for both continuous and discrete outcomes, but require discrete treatments. We implement these methods in a new Stata package, tesensitivity, for easy use in practice. We illustrate how to use this package and these methods with an empirical application to the National Supported Work Demonstration program. |
| Date: | 2019–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:boc:scon19:51&r=all |
| By: | Ying, Jiahui; Shonkwiler, J. Scott |
| Keywords: | Environmental Economics and Policy |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290818&r=all |
| By: | Mariana Carrera; Heather Royer; Mark Stehr; Justin Sydnor; Dmitry Taubinsky |
| Abstract: | A large literature treats take-up of commitment contracts, in the form of choice-set restrictions or penalties, as a smoking gun for (awareness of) self-control problems. This paper provides new techniques for examining the validity of this assumption, as well as a new approach for detecting (awareness of) self-control problems. Theoretically, we show that with some uncertainty about the future, demand for commitment contracts is closer to a special case than to a robust implication of models of limited self-control. In a field experiment with 1292 members of a fitness facility, we find that many participants take up commitment contracts both for going to the gym more and for going to the gym less, and there is a significant positive correlation in demand for these two types of contracts. This suggests that commitment contract take-up reflects, at least in part, something other than the desire to change own future behavior, such as demand effects or "noisy valuation." Moreover, we find that commitment contract take-up is negatively related to awareness of self-control problems: a novel information treatment that increased awareness of self-control problems reduced demand for commitment contracts. We address the limitations of using commitment contracts as a measurement tool by showing that a combination of belief forecasts and willingness to pay for linear incentives provides more robust identification of limited self-control and people's awareness of it. We use the methodology to obtain some of the first parameter estimates of partially-sophisticated quasi-hyperbolic discounting in the field. |
| JEL: | C9 D9 I12 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26161&r=all |
| By: | Krenz, Astrid |
| Abstract: | About 30 years after German reunification a persistent gap in different firm performance measures exists between East and West Germany. In this paper I focus on the differences in new German manufacturing plants' location choices across the German district-free cities and districts and investigate its regional determinants. For that purpose, I construct a novel, rich regional- and firm-level dataset based on the Official Firm Statistics from the German Federal Statistical Office and the Offices of the Laender. The analysis provides first time evidence how in particular the location decision of firms in the German economy is influenced by regional road infrastructure as well as regional structural funding. The effects are economically important and significant. The results reveal that a 10 percent increase in firm agglomeration increases the odds of a new plant to locate in the region by 12 percent. A 10 percent decrease of travel time on roads increases the odds of a plant to locate by 4 percent in overall Germany, by 7.6 percent among East German regions and by 26.5 percent in particular for large plants in the East German regions. A 10 percent larger population increases the odds to locate by 8.7 percent. A 10 percent increase in regional structural funding for infrastructure purposes increases the odds to locate in a region in East Germany by 8.3 percent in particular for large plants. Policy implications emerge that address in particular the improvement of infrastructure and support to reap off benefits that arise from agglomeration externalities. |
| Keywords: | firm location choice,regional road infrastructure,Germany,agglomeration economies,regional structural funding,East-West gap,conditional logit,nested logit |
| JEL: | D22 L25 R11 R12 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:378&r=all |
| By: | Bartle, Brian; Maredia, Mywish K. |
| Keywords: | Research and Development/Tech Change/Emerging Technologies |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290843&r=all |
| By: | Henning, Christian H. C. A.; Diaz, Daniel; Lendewig, Andrea |
| Abstract: | Electoral competition is a democratic mechanism to guarantee high governmental performance. In reality, however, it often leads to policy failure due to Government Capture and Government Accountability. An understanding of both phenomena has to be based on voter theory and nowadays the probabilistic voter model is the workhorse model applied in voter studies. In this paper we first proceeded to derive a theoretical model to estimate voter behavior including three voting motives: non-policy oriented, policy oriented and retrospective oriented. Then, we derived government performance indicators to estimate Capture and Accountability based on marginal effects and relative importance of the three components. Subsequently, we tested our theory estimating a probabilistic voter model for Ghana using own election survey data. In particular, we calculated different mixed logit model specifications and, to allow heterogeneity, we followed the latent class approach. Using the results of the estimations, we were able to calculate marginal effects and relative importance of each voting motive and we found that the non-policy component is the most important whereas the retrospective component is the less relevant. Finally, the government performance indicators were estimated and they suggest that, although the political weights are unequally distributed in Ghana, the government is partially accountable towards the voter and elections provide an effective mechanism to promote democracy. |
| Keywords: | probabilistic voter model,capture,accountability,agricultural policy,Ghana,Africa |
| JEL: | Q18 C31 C35 C38 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cauapw:wp201804&r=all |
| By: | Grant, Kara R.; Gallardo, Karina; McCluskey, Jill J. |
| Keywords: | Demand and Price Analysis |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290794&r=all |
| By: | Moturi, Walter O.; Florkowski, Wojciech J. |
| Keywords: | Food Consumption/Nutrition/Food Safety |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290934&r=all |