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on Discrete Choice Models |
| By: | Cheng Chou (University of Leicester); Geert Ridder (University of Southern California); Ruoyao Shi (Department of Economics, University of California Riverside) |
| Abstract: | In a dynamic binary choice model that allows for general forms of nonstationarity, we transform the identification of the flow utility parameters into the solution of a (linear) system of equations. The identification of the parameters, therefore, follows the usual argument for linear GMM. In particular, we show that the state transition distribution is not essential for the identification and estimation of the parameters. We propose a three-step conditional-choice-probability-based semiparametric estimator that bypasses estimation of and simulating from the state transition distribution. Simulation experiments show that our estimator gives comparable or better estimates than a competitor estimator, yet it requires fewer assumptions in certain scenarios, is substantially easier to implement, and is computationally much less demanding. The asymptotic distribution of the estimator is provided, and the sensitivity of the estimator to a key assumption is also examined. |
| Keywords: | dynamic binary choice model, Markov property, linear system, identification, semiparametric estimation |
| JEL: | C35 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucr:wpaper:202402&r=dcm |
| By: | Cassidy Shubatt; Jeffrey Yang |
| Abstract: | Some choice options are more difficult to compare than others. This paper develops a theory of what makes a comparison complex, and how comparison complexity generates systematic mistakes in choice. In our model, options are easier to compare when they 1) share similar features, holding fixed their value difference, and 2) are closer to dominance. We show how these two postulates yield tractable measures of comparison complexity in the domains of multiattribute, lottery, and intertemporal choice. Using experimental data on binary choices, we demonstrate that our complexity measures predict choice errors, choice inconsistency, and cognitive uncertainty across all three domains. We then show how canonical anomalies in choice and valuation, such as context effects, preference reversals, and apparent probability weighting and present bias in the valuation of risky and intertemporal prospects, can be understood as responses to comparison complexity. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.17578&r=dcm |
| By: | Lukas Leitner; |
| Abstract: | The subjective well-being (SWB) method has become a popular tool to estimate the willingness to pay for non-market goods. In this method, the willingness to pay measure contains the ratio of two coefficients (of the nonmarket good and consumption), which are both estimated in a regression on subjective well-being. Computing confidence intervals for such ratios turns out to be error-prone, in particular when the consumption coefficient is imprecisely estimated. In this paper, five different ways of computing the confidence intervals are compared: the delta, Fieller, parametric bootstrapping, and bootstrapping method, and a numerical integration of Hinkley’s formula. Using a large number of simulated SWB data sets, confidence intervals and their coverage rates are computed for each method. The findings suggest that the delta method is accurate only if the consumption coefficient is estimated with very high precision. All other methods turn out to be more robust, with minor differences in accuracy. |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:2310&r=dcm |
| By: | Orville Mondal; Rui Wang |
| Abstract: | This paper provides partial identification of various binary choice models with misreported dependent variables. We propose two distinct approaches by exploiting different instrumental variables respectively. In the first approach, the instrument is assumed to only affect the true dependent variable but not misreporting probabilities. The second approach uses an instrument that influences misreporting probabilities monotonically while having no effect on the true dependent variable. Moreover, we derive identification results under additional restrictions on misreporting, including bounded/monotone misreporting probabilities. We use simulations to demonstrate the robust performance of our approaches, and apply the method to study educational attainment. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2401.17137&r=dcm |
| By: | Anna Alberini (AREC, University of Maryland, USA.); Milan Scasny (Charles University, Institute of Economic Studies at Faculty of Social Sciences and The Environment Center, Czech Republic.) |
| Abstract: | We conduct a contingent valuation survey in Spain and the UK to elicit information about the Willingness to Pay (WTP) for heat wave watch and response programs. We find that people are willing to pay for such programs, and that the WTP (EUR 50 for each of 10 years; 2019 PPP euro) is virtually the same across the two countries and across respondents that received two alternate presentations of the mortality risks with and without the programs. The responses to the WTP questions are internally consistent. Persons who re-assessed their own risks as “very high†after reading the questionnaire's information about the health effects of excessive heat are prepared to pay more for these programs. These persons are in poor health and less highly educated, and thus an important priority for outreach and education efforts by heat wave watch and response programs. That people value saving lives during heat waves as important is confirmed by the results of person tradeoffs, which show that avoiding a fatality during heat waves is comparable to avoiding a cancer fatality, is slightly more valuable than an avoiding a cardiovascular fatality, and definitely more valuable than an avoided road traffic fatality. The Value per Statistical Life implied by the WTP for the programs is EUR 1.1 million to EUR 4.7 million (2019 PPP euro), depending on the size of the mortality risk reduction valued by the respondent, for an average of EUR 1.6 million. |
| Keywords: | Climate Change; Heat Waves; Health Risks; Value per Statistical Life (VSL); Life-saving Programs |
| JEL: | Q51 Q54 Q58 K32 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_09&r=dcm |
| By: | Andersson, Angelica (Swedish National Road and Transport Research Institute (VTI); ITN, Linköping University, Sweden); Kristoffersson, Ida (Swedish National Road and Transport Research Institute (VTI)); Daly, Andrew (ITS, University of Leeds, United Kingdom); Börjesson, Maria (Swedish National Road and Transport Research Institute (VTI); IEI, Linköping University, Sweden) |
| Abstract: | The accuracy of a transport demand model’s predictions is inherently limited by the quality of the underlying data. This issue has been highlighted by the decline in response rates for transport surveys, which have traditionally served as the primary data source for estimating transport demand models. At the same time, mobile phone network data, not requiring active participation from subjects, have become increasingly available. However, some key trip and traveller characteristics enhancing the prediction power of the estimated models are not collected in mobile phone network data. In this paper we therefore investigate what can be gained from combining mobile phone network data with travel survey data, using the strengths of each data source, to estimate long-distance mode choice models. We propose and estimate a set of mode choice demand models on joint mobile phone network data and travel survey data. We show that combining the two data sources produces more credible estimates than models estimated on each data source separately. The travel survey should preferably include the variables: travel party size, cars per household licence, licence holding, in addition to origin, destination, mode, trip purpose, age, and gender of the respondent. |
| Keywords: | Data combination; Discrete choice modelling; Latent class model; Longdistance mode choice; Mobile phone network data; Transport elasticities; Transport planning; Planning practice |
| JEL: | R41 R42 |
| Date: | 2024–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:vtiwps:2024_001&r=dcm |
| By: | Simon Mongey; Michael E. Waugh |
| Abstract: | This paper characterizes the allocations that emerge in general equilibrium economies populated by households with preferences of the additive random utility type that make discrete consumption, employment or spatial decisions. We start with a complete markets economy where households can trade claims contingent upon the realizations of their preference shocks. We (i) establish a first and second welfare theorem, (ii) illustrate that in the absence of ex-ante trade, discrete choice economies are generically inefficient, (iii) show that complete markets are not necessary and a much smaller set of securities decentralizes the efficient allocation. We illustrate the relevance of these results in several canonical settings and for measuring how welfare changes in response to changes in prices. |
| Keywords: | Welfare; Discrete choice; Complete markets |
| JEL: | R13 F10 E20 D52 |
| Date: | 2024–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:97772&r=dcm |
| By: | Simon Mongey; Michael E. Waugh |
| Abstract: | This paper characterizes the allocations that emerge in general equilibrium economies populated by households with preferences of the additive random utility type that make discrete consumption, employment or spatial decisions. We start with a complete markets economy where households can trade claims contingent upon the realizations of their preference shocks. We (i) establish a first and second welfare theorem, (ii) illustrate that in the absence of ex-ante trade, discrete choice economies are generically inefficient, (iii) show that complete markets are not necessary and a much smaller set of securities decentralizes the efficient allocation. We illustrate the relevance of these results in several canonical settings and for measuring how welfare changes in response to changes in prices. |
| JEL: | D5 D52 E2 F1 R13 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32135&r=dcm |
| By: | Eßer, Jana; Flörchinger, Daniela; Frondel, Manuel; Sommer, Stephan |
| Abstract: | Cognitive dissonance may arise from the inconsistency between an individual's behavior and her self-image. We investigate whether the provision of information that induces cognitive dissonance can increase sustainable consumption, and specifically whether individuals avoid cognitive dissonance by (a) a change in behavior to comply with own attitudes and by (b) two types of self-deception: the denial of attitudes and the denial of knowledge about the criticism of conventional online shopping. To this end, we develop a rational choice model and embed an incentivized discrete-choice task in a large-scale survey conducted in Germany in 2021, with the choice being between a voucher for either a conventional or a sustainable online market place. In an experimental setting, we aim to induce cognitive dissonance by either randomly reminding participants of their previously stated attitudes towards sustainable production or by informing them about the typical criticism of conventional online shopping. Results indicate that individuals adapt their behavior after having received the reminder of their stated attitudes and the criticism about conventional online shopping. Yet, participants do not deceive themselves by aligning their attitudes with their behavior or by denying to have been aware of the criticism. |
| Abstract: | Kognitive Dissonanz kann aus der Inkonsistenz zwischen dem Verhalten einer Person und ihrem Selbstbild entstehen. Wir untersuchen, ob die Bereitstellung von Informationen, die kognitive Dissonanz hervorrufen, den nachhaltigen Konsum steigern kann, und insbesondere, ob Individuen kognitive Dissonanz vermeiden, indem sie (a) ihr Verhalten ändern, um den eigenen Einstellungen zu entsprechen, und (b) zwei Arten von Selbsttäuschung betreiben: die Verleugnung von Einstellungen und die Verleugnung von Wissen über die Kritik am konventionellen Online-Shopping. Zu diesem Zweck entwickeln wir ein Rational-Choice-Modell und betten eine incentivierte Discrete-Choice-Aufgabe in eine groß angelegte Umfrage ein, die 2021 in Deutschland durchgeführt wird, wobei die Wahl zwischen einem Gutschein für einen konventionellen oder einen nachhaltigen Online-Marktplatz besteht. In einem experimentellen Setting zielen wir darauf ab, kognitive Dissonanz zu induzieren, indem wir die Teilnehmenden entweder zufällig an ihre zuvor geäußerte Einstellung zu nachhaltiger Produktion erinnern oder sie über die typische Kritik am konventionellen Online-Einkauf informieren. Die Ergebnisse zeigen, dass die Teilnehmenden ihr Verhalten anpassen, nachdem sie an ihre Einstellungen erinnert und über die Kritik am konventionellen Online-Shopping informiert wurden. Sie täuschen sich jedoch nicht selbst, indem sie ihre Einstellungen mit ihrem Verhalten in Einklang bringen oder leugnen, von der Kritik gewusst zu haben. |
| Keywords: | Behavioral economics, cognitive dissonance, sustainable behavior |
| JEL: | A13 H23 D91 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:282990&r=dcm |
| By: | Andrew McLennan (School of Economics, University of Queensland); Shino Takayama (School of Economics, University of Queensland); Yuki Tamura (Center for Behavioral Institutional Design, NYU Abu Dhabi) |
| Abstract: | We show that the application of the Generalized Constrained Probabilistic Serial mechanism of Balbuzanov (2022) (which generalizes the Probabilistic Serial mechanism of Bogomolnaia and Moulin (2001)) to school choice has attractive properties. The mechanism is intuitively simple, assigning to each student, at each moment in the unit interval, probability of receiving a seat in her favorite school among those that are available then. It is sd-efficient and effectively strategy proof. We provide an algorithm, based on a generalization of Hall’s marriage theorem, for computing the mechanism, which has been implemented, and seems likely to have reasonable running times even for the world’s largest school choice problems. |
| Keywords: | School Choice, Object Allocation, Efficiency, Fairness, Strategy Proofness, Probabilistic Serial Mechanism, Hall’s Marriage Theorem.; School Choice, Object Allocation, Efficiency, Fairness, Strategy Proofness, Probabilistic Serial Mechanism, Hall’s Marriage Theorem |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uq2004:668&r=dcm |
| By: | María Victoria Gasca (G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Rémy Rigo-Mariani (G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Vincent Debusschere (G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes, G2Elab-SYREL - G2Elab-SYstèmes et Réseaux ELectriques - G2ELab - Laboratoire de Génie Electrique de Grenoble - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes); Yousra Sidqi (Lucerne University of Applied Sciences and Arts [Luzern]); Cédric Clastres (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes) |
| Abstract: | This paper aims to give an insight on the motivation of end-users within an energy community to encourage other users to join by sponsoring them. The proposed community organization is divided in two stages: first one for energy management and second one for costs allocation in an energy community (i.e. the way the overall bill is distributed among the members). In particular, two billing allocation approaches are proposed and account for end-user's preferences and their willingness to pay. Those strategies are based on an approach designed to set individual tariffs while preserving the properties of traditional allocation methods. This work gives perspective on different end-user's preferences and facilitates the understanding of energy communities farther than merely financial enterprises. |
| Keywords: | Energy communities, Willingness to pay, Cost allocation, Energy management strategy |
| Date: | 2023–10–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04431478&r=dcm |