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on Discrete Choice Models |
| By: | Mohit Batham; Soudeh Mirghasemi; Mohammad Arshad Rahman; Manini Ojha |
| Abstract: | This chapter presents an overview of a specific form of limited dependent variable models, namely discrete choice models, where the dependent (response or outcome) variable takes values which are discrete, inherently ordered, and characterized by an underlying continuous latent variable. Within this setting, the dependent variable may take only two discrete values (such as 0 and 1) giving rise to binary models (e.g., probit and logit models) or more than two values (say $j=1,2, \ldots, J$, where $J$ is some integer, typically small) giving rise to ordinal models (e.g., ordinal probit and ordinal logit models). In these models, the primary goal is to model the probability of responses/outcomes conditional on the covariates. We connect the outcomes of a discrete choice model to the random utility framework in economics, discuss estimation techniques, present the calculation of covariate effects and measures to assess model fitting. Some recent advances in discrete data modeling are also discussed. Following the theoretical review, we utilize the binary and ordinal models to analyze public opinion on marijuana legalization and the extent of legalization -- a socially relevant but controversial topic in the United States. We obtain several interesting results including that past use of marijuana, belief about legalization and political partisanship are important factors that shape the public opinion. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2109.10122&r= |
| By: | Carole Ropars-Collet (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Philippe Le Goffe (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Qods Lefnatsa (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | Catch-and-release (C&R) could be an interesting management tool in recreational fisheries as long as mortality remains low and the anglers' well-being does not drop. We used a choice experiment to examine the potential of C&R angling as a monitoring tool for the salmon recreational fishery in Brittany (France) in summer 2017. Anglers were asked to choose between hypothetical fishing day trips differing in terms of their combination of relevant attributes and levels and distance to travel. From the analysis of respondents' trade-offs between the fishing trip's attributes, willingness-to-pay was estimated for each level of attribute. Our results show that anglers prefer unrestrictive regulations. On average, we observe that C&R has a depressive effect on the valuation of the fishing day. However, some socioeconomic groups positively value C&R. All in all, the majority of the anglers nonetheless hold a positive valuation of a C&R fishing day, which could therefore be used to generate economic returns for the river once the total admissible capture (TAC) is reached. Lastly, the fishing season, and especially the level of river use, impacts more on the value of fishing than C&R. |
| Keywords: | Choice experiment,Catch and release,Salmon fishing,Recreational activity |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03342732&r= |
| By: | Alyssa Carlson (Department of Economics, University of Missouri-Columbia) |
| Abstract: | For binary response models, the literature primarily addresses endogeneity by a control function approach assuming conditional independence (CF-CI). However, as the literature also notes, CF-CI implies conditions like homoskedasticity (of the latent error with respect to the instruments) that fail in many empirical settings. I propose an alternative approach that allows for heteroskedasticity, achieving identification with a conditional mean restriction. These identification results apply to a latent Gaussian error term with exibly parametrized heteroskedasticity. I propose a two step conditional maximum likelihood estimator and derive its asymptotic distribution. In simulations, the new estimator outperforms others when CF-CI fails and is fairly robust to distributional misspecification. |
| Keywords: | Binary choice model, Endogenous regressors, Control function, Heteroskedasticity |
| JEL: | C31 C35 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:2113&r= |
| By: | Mohammad Nur Nobi |
| Abstract: | A majority portion of the slum people is involved in service sectors. The city dwellers are somehow dependent on the services of those people. Pure drinking water and hygiene is a significant concern in the slums. Because of the lack of these two items, the slum people are getting sick, which causes the interruption to their services. In addition, they can transmit the diseases they suffer from to the service receiver. With these aims, this study endeavors to explore the willingness to pay of the households who receive the services of the slum people using the mixed-method techniques. Under this technique, 265 households were surveyed through face-to-face interviews, and 10 KIIs were conducted with slum people. The study's findings suggest that the households showed their willingness to pay for the improvement of the water and sanitation facilities in the slums. However, the KIIs findings show that the slum people are not willing to pay for the improvement as they claim that government should finance the project of improving water and sanitation facilities in the slums. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2109.05421&r= |
| By: | Amit Gandhi; Aviv Nevo |
| Abstract: | This is an invited chapter for the forthcoming Volume 4 of the Handbook of Industrial Organization. We present empirical models of demand and supply in differentiated products industries with an emphasis on the key ideas arising from the recent applied literature. We start with a discussion of the challenges in modeling and estimation of demand for differentiated products, and focus on discrete choice characteristics-based demand models that address these challenges while allowing enough flexibility to capture realistic substitution patterns. Our discussion emphasizes how empirical strategies can leverage different features of data depending on the sources of variation that are commonly found in applied work. Moving to the supply-side, we show how demand estimates combined with a pricing model, can be used to recover markups and marginal costs. We also show how the model of pricing can be tested. We discuss a baseline Bertrand-Nash model of competitive pricing, and expand it to cover a) coordinated pricing, b) wholesale relationships, and c) bargaining. We end the chapter with extensions of the demand model, including dynamic and continuous demand. |
| JEL: | C01 D12 D22 D43 L13 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29257&r= |
| By: | James Holehouse; Hector Pollitt |
| Abstract: | We solve the binary decision model of Brock and Durlauf (2001) in time using methods often employed in studies of stochastic complex systems. This solution is valid when not at equilibrium and can be used to exemplify path-dependent behaviours of their model. The solution is computationally fast and is indistinguishable from Monte Carlo simulation. Lock-in effects are observed in some regions of the model's parameter space, and we calculate the time scale of the lock-ins. Curiously, we find that although altruistic agents coalesce more strongly on a particular decision, increasing their utility in the short-term, they are also more prone to being stuck in a non-optimal decision lock-in as compared to selfish agents. Finally, we construct a likelihood function that can be used on non-equilibrium data for model calibration. Even with a well-defined likelihood function, model calibration is difficult unless one has access to data representative of the underlying model. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2109.09633&r= |
| By: | Sandro Ambuehl; B. Douglas Bernheim |
| Abstract: | We investigate how individuals think groups should aggregate members’ ordinal preferences – that is, how they interpret “the will of the people.” In an experiment, we elicit revealed attitudes toward ordinal preference aggregation and classify subjects according to the rules they apparently deploy. Majoritarianism is rare. Instead, people employ rules that place greater weight on compromise options. The classification’s fit is excellent, and clustering analysis reveals that it does not omit important rules. We ask whether rules are stable across domains, whether people impute cardinal utility from ordinal ranks, and whether attitudes toward aggregation differ across countries with divergent traditions. |
| Keywords: | Experiment, welfare economics, social choice, Borda, Condorcet |
| JEL: | C91 D71 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:395&r= |
| By: | Myriam Le Goff-Pronost (IMT Atlantique - LUSSI - Département Logique des Usages, Sciences sociales et Sciences de l'Information - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris], MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - UBS - Université de Bretagne Sud - IMT - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes, LaTIM - Laboratoire de Traitement de l'Information Medicale - UBO - Université de Brest - INSERM - Institut National de la Santé et de la Recherche Médicale - CHRU Brest - Centre Hospitalier Régional Universitaire de Brest - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris] - IBSAM - Institut Brestois Santé Agro Matière - UBO - Université de Brest); Nicolas Jullien (IMT Atlantique - LUSSI - Département Logique des Usages, Sciences sociales et Sciences de l'Information - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris], MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - UBS - Université de Bretagne Sud - IMT - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes, LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - IMT - Institut Mines-Télécom [Paris] - IBSHS - Institut Brestois des Sciences de l'Homme et de la Société - UBO - Université de Brest - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris]); Godefroy Dang Nguyen (IMT Atlantique - LUSSI - Département Logique des Usages, Sciences sociales et Sciences de l'Information - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris], MARSOUIN - Môle Armoricain de Recherche sur la SOciété de l'information et des usages d'INternet - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris] - UBL - Université Bretagne Loire - UBS - Université de Bretagne Sud - IMT - Institut Mines-Télécom [Paris] - UR2 - Université de Rennes 2 - UNIV-RENNES - Université de Rennes - UBO - Université de Brest - Ecole Nationale de la Statistique et de Analyse de l'Information - Rennes, LEGO - Laboratoire d'Economie et de Gestion de l'Ouest - UBS - Université de Bretagne Sud - UBO - Université de Brest - IMT - Institut Mines-Télécom [Paris] - IBSHS - Institut Brestois des Sciences de l'Homme et de la Société - UBO - Université de Brest - UBL - Université Bretagne Loire - IMT Atlantique - IMT Atlantique Bretagne-Pays de la Loire - IMT - Institut Mines-Télécom [Paris]) |
| Abstract: | Background: the economic model of Wikipedia is based on donations. What would happen if these donations were to decrease and no longer covered all the costs borne by the Wikimedia Foundation? Objectives: we propose to measure, through a contingent valuation model, the willingness to pay Wikipedia users for free access without advertising (traditional economic model of online projects). What is the amount they are willing to pay and what is the profile and motivation of the donors? Method: the study is based on a survey of 16432 french-language people and a Heckman-type econometric model. Results: the results estimate that the average amount that people are willing to pay per year for Wikipedia without advertising is € 5.64 (€ 7.73, considering only those who agree to pay). The profile of those willing to pay is identical to that of other public goods, and the value of the amount paid is highly dependent on the level of income. The amount envisaged is higher than the donation campaigns proposed by Wikipedia (€ 2) but lower than the average donation received by the Wikimedia Foundation (€ 10), but these are often nonrecurring donations. |
| Keywords: | contingent valuation,online projects,willingness-to-pay,Wikipedia |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03338895&r= |
| By: | Michael Stanley Smith |
| Abstract: | Implicit copulas are the most common copula choice for modeling dependence in high dimensions. This broad class of copulas is introduced and surveyed, including elliptical copulas, skew $t$ copulas, factor copulas, time series copulas and regression copulas. The common auxiliary representation of implicit copulas is outlined, and how this makes them both scalable and tractable for statistical modeling. Issues such as parameter identification, extended likelihoods for discrete or mixed data, parsimony in high dimensions, and simulation from the copula model are considered. Bayesian approaches to estimate the copula parameters, and predict from an implicit copula model, are outlined. Particular attention is given to implicit copula processes constructed from time series and regression models, which is at the forefront of current research. Two econometric applications -- one from macroeconomic time series and the other from financial asset pricing -- illustrate the advantages of implicit copula models. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2109.04718&r= |
| By: | Bazoche, Pascale; Guinet, Nicolas; Poret, Sylvaine; Teyssier, Sabrina |
| Abstract: | A widespread transition towards diets based on plant proteins as substitutes for animal pro- teins would contribute to food system sustainability. Such changes in consumer food choices can be fostered by public policy. We conducted an online experiment to test whether provid- ing consumers with information regarding the negative consequences of meat consumption on the environment or health increases the substitution of animal-based proteins with plant-based proteins. The consumers had to make three meal selections, the first without exposure to infor- mation and the latter two after exposure to environmental or health information. One group of consumers served as the control and received no information. The results show that half of the consumers chose meals with animal proteins in all three cases. The information intervention had a limited impact on the average consumer. However, a latent class analysis shows that the information intervention impacted a sub-sample of the consumers. Information policy does not appear to be sufficient for altering consumer behaviour regarding the consumption of animal proteins. |
| Keywords: | Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics |
| Date: | 2021–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:ags:inrasl:313663&r= |