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on Discrete Choice Models |
| By: | Talpur, Musharaf; Brouwer, Roy; Koetse, Mark |
| Abstract: | In this study, we assess the convergent validity of preferences and willingness-to-pay (WTP) values for beach quality improvements from a gender perspective by isolating opt-out forced-choice effect from the SP1 DCE data (that is a forced-choice situation when a respondent was asked to select among the competing labelled alternatives if they chose an opt-out). Following this approach, we combine the RP discrete choice model and SP1 DCE datasets by splitting them into female and male sub-samples and then investigate whether estimated preferences and WTP values are susceptible to this effect from a gender perspective. Using the multinomial logit (MNL) models, we find that female visitors’ preferences are compatible across RP and SP1 data if the forced-choice effect is isolated from SP1 data, whereas this is not true for the male visitors. However, WTP values appear similar for both the female and male RP and SP1 sub-samples. Also, the sources of opt-out forced choices appear more promising for females than those of male counterparts in the estimated binary logit models. Our results, therefore, suggest that preferences’ similarity is a gender-specific if the opt-out forced-choice effect is isolated, but WTP similarity is not. |
| Keywords: | Revealed preference; Discrete choice model, Discrete choice experiments; Opt-out forced-choice effect; Gender perspective |
| JEL: | Q5 Q51 Q57 |
| Date: | 2019–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99631&r=all |
| By: | Ochieng, Dennis O. |
| Abstract: | While contract farming provides opportunities to link smallholder farmers to markets, its sustainability depends on how the interests of both farmers and buyers are addressed. Previous studies analyze farmers’ preferences for contracts, but buyers’ preferences for contracts and design attributes are hardly examined. This Working Paper contributes to the knowledge gap by analyzing farmers’ and buyers’ preferences for contracts and design attributes, and the similarities and differences in preferences using a discrete choice experiment with 505 cotton farmers and 512 tea farmers in southern Malawi. Using a mixed logit model, the author examines farmers’ and buyers’ preferences and estimate farmers’ willingness to pay for improvement of contract attributes. Results show that both farmers and buyers have positive preferences for contracts in general and for many design attributes. The author however observes clear differences in preference for payment mode where farmers prefer spot payments while buyers prefer delayed payments. Further, while both parties prefer better quality products, there are no standardized grading systems for the two crops in Malawi. Consequently, buyers are skeptical of farmers’ ability to produce quality products while farmers are distrustful of buyers’ grading systems. Even though buyers are open to offer contracts that provide inputs or insurance to farmers, there are no information sharing platforms to guide in contracting farmers thus exposing buyers to risks of contract default. The author also finds that farmers prefer contracts that address their social needs as seen in their choice of contracts with funeral expenses insurance. Such attributes could strengthen the relationship between farmers and buying companies. Sustainable contract schemes require designing contracts that are acceptable to both farmers and buyers by balancing risks between the parties. Successful contract relationships have to build business relationships and foster mutual trust by developing standardized grading systems and information sharing platforms for buyers and farmers to guide selection into the schemes. To minimize side-selling, companies can advance cash credit to liquidity constrained farmers, but this must be accompanied by stronger contract enforcement mechanisms. |
| Keywords: | MALAWI, SOUTHERN AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, contracts, cotton, tea, farmers, companies, contract farming, agriculture production, passbooks, contract preferences, buyers, choice experiment |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:masspp:34&r=all |
| By: | Martinez-Cruz, Adan L. (CERE - the Center for Environmental and Resource Economics); Nuñez, Hector (Centro de Investigacion y Docencia Economicas (CIDE), Aguascalientes, Mexico) |
| Abstract: | Via a discrete choice experiment, this paper documents that residential electricity consumers in Aguascalientes, Mexico, are willing to pay a premium for renewable energies as well as for the creation of green jobs. These results are particularly timely because the current Federal administration has redirected priorities from an energy transition that was expected to boost renewable energies to the pursuing of energy sovereignty. Concerns regarding this prioritization have been raised by national and international stakeholders due to its potential economic ineffciency and its implications for the achievement of climate change goals. These concerns have only intensied as discussions begin on how Mexico should face the post-coronavirus recession. This paper's findings open the door to discuss whether a combination of a just energy transition together with the boosting of renewable energies should be part of a strategy to reach energy sovereignty at the same time that Mexico deals with a post-coronavirus world. |
| Keywords: | Residential renewable electricity demand; just energy transition; post-coronavirus policy; energy sovereignty; Mexico; discrete choice experiment |
| JEL: | Q42 Q48 Q51 |
| Date: | 2020–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2020_006&r=all |
| By: | Ochieng, Dennis O. |
| Abstract: | While contract farming provides opportunities to link smallholder farmers to markets, its sustainability depends on how the interests of both farmers and buyers are addressed. Previous studies analyze farmers’ preferences for contracts, but buyers’ preferences for contracts and design attributes are hardly examined. The author contributes to the knowledge gap by analyzing farmers’ and buyers’ preferences for contracts and design attributes, and the similarities and differences in preferences using a discrete choice experiment with 505 cotton farmers and 512 tea farmers in southern Malawi. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:masspn:37&r=all |
| By: | Gallego, Guillermo; Li, Anran; Truong, Van-Anh; Wang, Xinshang |
| Abstract: | We propose one of the first models of “product framing” and pricing. Product framing refers to the way consumer choice is influenced by how the products are framed, or displayed. We present a model where a set of products are displayed, or framed, into a set of virtual web pages. We assume that consumers consider only products in the top pages, with different consumers willing to see different numbers of pages. Consumers select a product, if any, from these pages following a general choice model. We show that the product framing problem is NP-hard. We derive algorithms with guaranteed performance relative to an optimal algorithm under reasonable assumptions. Our algorithms are fast and easy to implement. We also present structural results and design algorithms for pricing under framing effects for the multi- nomial logit model. We show that for profit maximization problems, at optimality, products are displayed in descending order of their value gap and in ascending order of their markups. |
| Keywords: | analysis of algorithms; choice models; marketing; pricing |
| JEL: | J50 |
| Date: | 2020–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:101983&r=all |
| By: | Flórez, J |
| Abstract: | This paper examines the effects of supermarket loyalty programs on the demand for private labels (PLs). Using transaction level data on grocery purchases and individual level information on the membership of loyalty programs, I estimate a model of demand in which membership may affect the consumers’ valuation for PLs, their sensitivity to price changes and have spillover effects on both named brands (NBs) and rivals’ PLs. My identification strategy of the membership effect exploits observed variation in shopping patterns at the consumer level over time and across customer types (i.e., members and non-members) in each period to control for as much exogenous variation as possible, and includes a control function using characteristics of loyalty programs as instrumental variables to account for a potential selection bias related to unobserved factors of the membership decision. I find a significant effect of loyalty programs on consumer preferences for PLs. Compared to non-members, membership reduces consumers’ price sensitivity for the products sold by the supermarket they are members of, but increases it for products sold by supermarkets they are not members of. These effects are weaker for households that are members of the loyalty programs of multiple supermarkets. Counterfactual simulations show that when a supermarket modifies its loyalty program while competitors keep their own unchanged, it loses about 19% of customers to its rivals, on average. Furthermore, if loyalty programs were changed altogether, the demand for PLs would considerably decrease, while the demand for NBs would increase. |
| Keywords: | Supermarket chains, loyalty programs, private labels, discrete choice models, random coefficients, control function approach |
| JEL: | D12 L13 L66 |
| Date: | 2020–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:018063&r=all |
| By: | Muñoz-Pizza, Dalia M. (Oceanographic Research Institute. Universidad Autónoma de Baja California, Baja California, México); Villada-Canela, Mariana (Oceanographic Research Institute. Universidad Autónoma de Baja California, Baja California, México); Rivera-Castañeda, Patricia (Department of Urban and Environmental Studies, El Colegio de la Frontera Norte, Baja California, México); Reyna-Carranza, Marco A. (Oceanographic Research Institute. Universidad Autónoma de Baja California, Baja California, México); Osornio-Vargas, Alvaro (Department of Pediatrics, University of Alberta, Edmonton, Canada); Martínez-Cruz, Adan L. (CERE - the Center for Environmental and Resource Economics) |
| Abstract: | The pervasiveness of particulate matter in arid cities has yet to be discussed and tackled. Given that urban trees have been documented to provide air-filtering and dry deposition services, this study documents the stated benefits from an urban afforestation scenario in Mexicali –an arid city located northwest Mexico at the US-Mexico border. Our double-bounded dichotomous contingent valuation protocol yields an estimated average annual willingness to pay (WTP) of USD 88 per household. Variations in the WTP are associated with perception of air quality and presence of respiratory symptoms in the respondent’s household. The smallest WTP (USD 75) is reported by respondents perceiving poor air quality in their neighborhood and with no household members affected by respiratory symptoms. In contrast, respondents perceiving good air quality and with at least one household member facing respiratory symptoms reported a WTP of USD 99. The average stated benefits represent around 0.8% of the annual household income. |
| Keywords: | Air quality; PM10; urban afforestation; contingent valuation; arid cities; Mexicali. |
| JEL: | Q51 Q53 Q58 Q59 |
| Date: | 2020–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:slucer:2020_007&r=all |
| By: | Simon Meunier (GeePs - Laboratoire Génie électrique et électronique de Paris - UP11 - Université Paris-Sud - Paris 11 - CentraleSupélec - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique); Dale T. Manning (CSU - Colorado State University [Fort Collins]); Loic Queval (GeePs - Laboratoire Génie électrique et électronique de Paris - UP11 - Université Paris-Sud - Paris 11 - CentraleSupélec - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique); Judith A. Cherni (Imperial College London); Philippe Dessante (GeePs - Laboratoire Génie électrique et électronique de Paris - UP11 - Université Paris-Sud - Paris 11 - CentraleSupélec - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique); Daniel Zimmerle (CSU - Colorado State University [Fort Collins]) |
| Abstract: | Access to water for domestic and irrigation uses remains limited across Sub-Saharan Africa, particularly in rural areas. While the technical feasibility of implementing innovative technologies to improve water supply has been often evaluated, less is known about the drivers that motivate users to pay for obtaining the inherent benefits of improved water supply. In this article, the determinants of the marginal willingness to pay (mWTP) for improved domestic and irrigation water are investigated. For this purpose, a contingent valuation study is performed in rural Rwanda. This study uses survey data from 316 households situated in 8 villages, in which ~20 % of the households receive electricity thanks to microgrids powered by solar energy. It is found that the mWTP for improved domestic water supply is influenced by the proportion of children in the household, business ownership, and satisfaction with water quantity and quality. The mWTP for irrigation is determined by respondent education, business ownership and crop area planted. This paper contributes to the literature by allowing a comparison of the determinants of the mWTP for improved domestic water supply to the determinants of the mWTP for irrigation. Another contribution is to examine the mWTP for improved water infrastructure in partially electrified villages. Identifying areas with high marginal benefits from water can guide infrastructure investment and electrification efforts while improving well-being and increasing revenues in rural areas. |
| Keywords: | Rwanda,Willingness to pay,Domestic water,Irrigation,Electricity access,Contingent valuation |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02179229&r=all |
| By: | Ryo Horii; Yoshiyasu Ono |
| Abstract: | In a simple continuous-time model where the learning process affects the willingness to hold liquidity, we provide an intuitive explanation of business cycle asymmetry and post-crisis slow recovery. When observing a liquidity shock, individuals rationally increase their subjective probability of re-encountering it. It leads to an upward jump in liquidity preference and a discrete fall in consumption. Conversely, as a period without shocks continues, they gradually decrease the subjective probability, reduce liquidity preference, and increase consumption. The recovery process is particularly slow after many shocks are observed within a short period because people do not easily change their pessimistic view. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1085&r=all |