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on Discrete Choice Models |
| By: | Sungwon Lee (Department of Economics, Sogang University, Seoul, Korea) |
| Abstract: | This paper considers binary choice models with panel data. We extend the correlated random effects binary choice models for panel data in Chamberlain (1980) to semiparametric models in which the conditional expectation projection of the unobserved time-invariant heterogeneity onto the space of functions of time-varying covariates for all time periods is nonparametrically specified. This class of models is tractable for identification and estimation of the model parameters with short panel data. We provide a set of mild conditions under which the parameters are identified. We propose to use the penalized sieve minimum distance (PSMD) estimation and develop the asymptotic theory. The PSMD estimators of finite dimensional parameters are shown to be semiparametrically efficient when the weighting matrix is the optimal one. We also show the bootstrap validity. The Monte Carlo simulation results confirm that the proposed estimator performs well in finite samples. |
| Keywords: | binary choice models, correlated random effects, sieve estimation, semiparametric efficiency, bootstrap |
| JEL: | C13 C14 C31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:sgo:wpaper:2302&r=dcm |
| By: | Galarza, Francisco (Universidad del Pacífico); Carbajal Navarro, Max Arturo (Pontificia Universidad Católica del Perú); Aguirre Montoya, Julio (Universidad del Pacífico) |
| Abstract: | We study the willingness to pay (WTP) for a large set of improvements in water service related to water quality, continuity, and securing access for people with no house piped water during the COVID-19 pandemic. Using data from urban Peru, and the contingent valuation method, we estimate a mean WTP of around PEN 4.3 (USD 1.05), 3.7 and 1.8, respectively, for the aforementioned sets of improvements, with the combined WTP representing a 23% increase in the households’ water service monthly bill. We find that the WTP for all sets of improvements is influenced by the expenditure in bottled water (which acts as a substitute for tap water) and a proxy variable for household assets. The influence of the individual characteristics typically scrutinized by the literature (e.g. sex, age, and education) varies with the type of improvement examined. We find a significant heterogeneity in WTP across providers and calculate the users’ contribution to a water fund that could crowd-in the public investment in water infrastructure. |
| Keywords: | Access to tap water, Contingent valuation method, Continuity, COVID-19, Households, Quality, Safe water, Willingness to pay. |
| JEL: | C25 D12 I10 L95 Q25 Q51 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:pai:wpaper:22-03&r=dcm |
| By: | Mononen, Lasse (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | Experimental evidence on intertemporal choice has documented a preference for consumption smoothing that cannot be explained by discounted utility. We study a general class of dynamically consistent intertemporal dual-self preferences that accommodate a preference for consumption smoothing. We show that these general preferences have a simple and tractable structure. They are characterized by a gain-loss asymmetry where gains with respect to future utility are discounted differently than losses. As applications, first, we show that under the stationarity axiom, these preferences are convex or concave. Second, we show that dynamically consistent intertemporal Choquet expected utility coincides with discounted expected utility. |
| Date: | 2024–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:686&r=dcm |
| By: | Mononen, Lasse (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | Dynamic consistency is crucial for credible evaluation of intergenerational choice plans that inherently lack commitment. We offer a general characterization for dynamically consistent intergenerational welfare aggregation. The aggregation is characterized by envy-guilt asymmetry in discounting with respect to future generations’ utility: Higher utility than future generations’ utility is discounted differently than lower utility than future generations’ utility. This offers a simple and tractable characterization for the dynamically consistent choice rules. |
| Keywords: | Dynamic consistency, discounting, social discount factor, preference aggregation |
| Date: | 2024–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:687&r=dcm |
| By: | Hutchings, Siobhan (Monash University) |
| Abstract: | We use an online experiment and survey to establish that consumers are misinformed about electric vehicles and that correcting misinformation has little impact on preferences for electric vehicles but some impact on electric vehicle policy preferences. Specifically, correcting misperceptions does not change consumers’ willingness to support pro-electric vehicle government initiatives but does cause specific EV policies to be preferred more or less. We estimate the effect of correcting misinformation by employing two information treatments : an informative narrative and a fact sheet. These treatments successfully make electric vehicle perceptions more accurate, but neither narratives nor fact sheets are more successful at correcting misperceptions. We determine preferences using survey questions, relying on indirect and incentivised questions to rule out the influence of social desirability bias on participants’ responses. |
| Keywords: | Consumer preferences ; Behavioral economics ; Electric vehicles ; Survey experiments ; Information treatments JEL classifications: C83 ; C90 ; D12 ; D83 ; D91 ; L62 ; Q48 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:wrkesp:74&r=dcm |
| By: | Schütze, Tobias; Carlhoff, Henrik; Witschel, Helena |
| Abstract: | Individual paternalistic preferences are central to the question to what extent the state may intervene in the freedom of choice of its citizens. Albeit its practical and theoretical importance, there is yet no incentivised tool to elicit those preferences. In this paper, we present a simple and abstract experiment to elicit paternalistic preferences and also investigate its relationship with individual psychological constructs that are argued to correlate with paternalistic preferences. In line with previous empirical results, our experimental data suggest that paternalistic preferences are indeed heterogeneously distributed in our sample. Moreover, we identify outcome related and autonomy related motives as important factors of paternalistic preferences. More precisely, (especially young) individuals with a strong desire for autonomy are more likely to opt for an informed choice and individuals with a strong focus on the outcome are more likely to opt for an uninformed choice than giving up their autonomy. |
| Keywords: | paternalistic preferences, revealed preferences approach, psychology of decision making, autonomous decision making, paternalism, libertarianism |
| JEL: | C91 D91 H10 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:roswps:169&r=dcm |
| By: | George Halkos; Phoebe Koundouri; Panagiotis Stavros Aslanidis; Angelos Plataniotis |
| Abstract: | Sustainable development incorporates the sustainable pathway of each civilization. However, cultural heritage assets can be heavily impacted by pollution, such as acid rain and climate change. The present study evaluates cultural heritage assets via a meta-regression analysis function transfer, in which we examined 106 studies, mainly from different countries, in the period 1995 - 2022. This methodology enables the valuation of cultural heritage - tangible and intangible - goods and services, as well as cultural values (e.g. aesthetic, spiritual, symbolic, etc.).The utilization of willingness-to-pay (WTP) would enable us to compare the two models (i.e., European and non-European) on how much a citizen would value cultural heritage based on non-market valuation.The results would inform policymakers about the importance of cultural heritage assets inthe sustainable development agenda. The results present that the WTP for the two examined models for Europe and non-European is 37.6�, and 60.12� respectively.Europeans are influenced mainly by intangible cultural assets, whereas non-Europeans are influenced by oral tradition. Overall, cultural heritage conservation necessitates for proper economic valuation through a holistic approach, in short - the valuation of intangible cultural heritage is imperative for sustainable development in an era of multi-crisis. |
| Keywords: | Willingnesstopay, Tangible cultural heritage, Intangible cultural heritage, Meta-regression analysis, Benefit transfer, Value transfer |
| JEL: | Z1 Z18 C5 Q53 Q5 |
| Date: | 2024–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:aue:wpaper:2407&r=dcm |
| By: | Elliot Lipnowski; Doron Ravid; Denis Shishkin |
| Abstract: | A sender commits to an experiment to persuade a receiver. Accounting for the sender's experiment-choice incentives, and not presupposing a receiver tie-breaking rule when indifferent, we characterize when the sender's equilibrium payoff is unique and so coincides with her "Bayesian persuasion" value. A sufficient condition in finite models is that every action which is receiver-optimal at some belief is uniquely optimal at some other belief -- a generic property. We similarly show the equilibrium sender payoff is typically unique in ordered models. In an extension, we show uniqueness generates robustness to imperfect sender commitment. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.06765&r=dcm |
| By: | Ronak Maheshwari (Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India)); Brinda Viswanathan (Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai) |
| Abstract: | The Right to Education Act of 2010 makes education a fundamental right for children aged six to fourteen years. Between 18 and 21 years, the activities of young adults diverge into pursuing further education or entering the labor force, or Not in Educational Employment and Training (NEET). Very few studies analyze the factors involved in these three choices and in particular, how the role of family and non-family networks varies across these activity statuses of youth in India after controlling for other covariates. This study attempts to fill this gap based on an empirical analysis of boys aged 18-21 years from the IHDS data for 2005-06 and 2011-12. The results from the discrete choice multinomial logit model show that, after controlling for socio-economic status, the primary source of household income, and parents’ education, both family and non-family networks increase the odds of enrolling in higher education or training compared to NEET while non-family networks favor workforce participation compared to NEET. The results further highlight that in addition to the number of ties the types of ties have a greater influence on the work-activity-related decisions of the youth. |
| Keywords: | Higher Education; Labor Force Participation; NEET; Social Networks; Youth Labor |
| JEL: | I23 J24 J64 N30 P36 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:mad:wpaper:2024-255&r=dcm |
| By: | Cavve, Blake Stockton; Hurlstone, Mark J.; Farrell, Simon |
| Abstract: | A number of social preference models have been proposed to account for the effect of social context on economic decision-making. To better differentiate these preferences at the individual level, we developed an adaptive binary-choice procedure based upon the Parameter Estimation by Sequential Testing (PEST) algorithm to estimate indifference points for scenarios of equality and inequality. We combined elicited indifference points in scenarios where the inequalities posed were advantageous and those where inequalities were disadvantageous to represent underlying motives of preference in two dimensional choice space (N = 83). We also explored the relationship between preference and leisure (vacation time) versus non-leisure (low income, high income, attractiveness, intelligence, and praise) attributes. We find considerable heterogeneity in preferences for leisure and non-leisure characteristics. Overall, a consistent plurality of participants fall into space characterised as “equality seeking”, followed by “status avoiding” and “relative advantage” preference archetypes. Self-interest preferences were strongest in low income and vacation attributes. Concern with advantageous inequality was correlated across domains, as was concern with disadvantageous inequality. The results highlight both discrete and continuous individual differences in social preference. |
| Date: | 2024–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:7tq4e&r=dcm |
| By: | Antonio Filippin; Marco Mantovani |
| Abstract: | Using a choice experiment we analyze moral preferences over fatalities and jobs losses due to the pandemic in Italy, the UK and the US. A structural estimation displays, surprisingly, aversion to diversification among these two bads. We also find that about 95% of the weight in the participants’ utility function goes to health, and that respondents’ stable traits (such as political orientation or risk aversion) influence attitudes more than their personal experiences with the consequences of the pandemic. Moreover, policy responses look misaligned with estimated preferences. Italy adopted more stringent containment measures, while Italian respondents display a relatively weaker pro-health attitude. |
| Keywords: | Covid-19, Structural estimation, Health-wealth trade-off, Moral preferences. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:531&r=dcm |
| By: | Akay, Alpaslan; Bargain, Olivier; Jara Tamayo, H. Xavier |
| Abstract: | Subjective well-being (SWB) data are increasingly used to perform welfare analysis. Interpreted as “experienced utility”, it has recently been compared to “decision utility” using small-scale experiments most often based on stated preferences. We transpose this comparison to the framework of non-experimental and large-scale data commonly used for policy analysis, focusing on the income–leisure domain where redistributive policies operate. Using the British Household Panel Survey, we suggest a “deviation” measure, which is simply the difference between actual working hours and SWB-maximizing hours. We show that about three-quarters of individuals make decisions that are not inconsistent with maximizing their SWB. We discuss the potential channels that explain the lack of optimization when deviations are significantly large. We find proxies for a number of individual and external constraints, and show that constraints alone can explain more than half of the deviations. In our context, deviations partly reflect the inability of the revealed preference approach to account for labor market rigidities, so the actual and SWB-maximizing hours should be used in a complementary manner. The suggested approach based on our deviation metric could help identify labor market frictions. |
| Keywords: | decision utility; experienced utility; labor supply; subjective well-being |
| JEL: | C90 I31 J22 |
| Date: | 2023–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117746&r=dcm |
| By: | Midtgård, Kenneth; Selart, Marcus |
| Abstract: | This paper examines to what degree organizations use strategies that focus on maximizing shareholder value (Theory E) or if they use strategies emphasizing the development of organizational capability (Theory O). Applying a cognitive perspective in strategic choice, our main goal was to investigate to what extent cognitive biases influenced strategic choices. A survey was developed that measured different aspects of the cognitive perspective in strategic choice. It was distributed to managers of several medium-sized organizations in Scandinavia (n = 119). The results indicated that managers used mixed strategies (Theory E and O) contrary to recommendations. Results also revealed that illusions of control together with beliefs about change processes skewed the application of strategies towards Theory E. Theoretical and practical implications of the results were finally discussed enlightening the cognitive perspective in strategic choice. |
| Date: | 2024–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:4xpza&r=dcm |
| By: | Jackson Bunting; Paul Diegert; Arnaud Maurel |
| Abstract: | We provide semiparametric identification results for a broad class of learning models in which continuous outcomes depend on three types of unobservables: i) known heterogeneity, ii) initially unknown heterogeneity that may be revealed over time, and iii) transitory uncertainty. We consider a common environment where the researcher only has access to a short panel on choices and realized outcomes. We establish identification of the outcome equation parameters and the distribution of the three types of unobservables, under the standard assumption that unknown heterogeneity and uncertainty are normally distributed. We also show that, absent known heterogeneity, the model is identified without making any distributional assumption. We then derive the asymptotic properties of a sieve MLE estimator for the model parameters, and devise a tractable profile likelihood based estimation procedure. Monte Carlo simulation results indicate that our estimator exhibits good finite-sample properties. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.08575&r=dcm |
| By: | Mohammad Mehdi Mousavi; Mahdi Kohan Sefidi; Shirin Allahyarkhani |
| Abstract: | Economists modeled self-control problems in decisions of people with the time-inconsistence preferences model. They argued that the source of self-control problems could be uncertainty and temptation. This paper uses an experimental test offered to individuals instantaneous reward and future rewards to measure awareness of self-control problems in a tempting condition and also measure the effect of commitment and flexibility cost on their welfare. The quasi-hyperbolic discounting model with time discount factor and present bias at the same time was used for making a model for measuring awareness and choice reversal conditions. The test showed 66% awareness of self-control (partially naive behaviors) in individuals. The welfare implication for individuals increased with commitment and flexibility costs. The result can be useful in marketing and policy-making fields design precisely offers for customers and society. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2402.11072&r=dcm |
| By: | Julian Granna; Stefan Lang; Nikolaus Umlauf |
| Abstract: | Modeling real estate prices in the context of hedonic models often involves fitting a Generalized Additive Model, where only the mean of a (lognormal) distribution is regressed on a set of variables without taking other parameters of the distribution into account. Thus far, the application of regression models that model the full conditional distribution of the prices, has been infeasible for large data sets, even on powerful machines. Moreover, accounting for heterogeneity of effects regarding time and location, is often achieved by naive stratification of the data rather than on a model basis. A novel batchwise backfitting algorithm is applied in the context of a structured additive distributional regression model, which enables us to efficiently model all distributional parameters of the price distribution. Using a large German dataset of apartment asking prices with over one million observations, we employ a model-based clustering algorithm to capture the heterogeneity of covariate effects on the parameters with respect to location. We thus identify clusters that are homogeneous with respect to the influence of location on price. A boosting type algorithm of the batchwise backfitting algorithm is then used to automatically determine the variables relevant for modelling the location and scale parameters in each regional cluster. This allows for a different influence of variables on the distribution of prices depending on the location and price segment of the dwelling. |
| Keywords: | IWLS proposals, MCMC, multiplicative interaction effects, structured additive predictor |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2024-02&r=dcm |
| By: | Jackson Bunting; Paul Diegert; Arnaud Maurel |
| Abstract: | We provide semiparametric identification results for a broad class of learning models in which continuous outcomes depend on three types of unobservables: i) known heterogeneity, ii) initially unknown heterogeneity that may be revealed over time, and iii) transitory uncertainty. We consider a common environment where the researcher only has access to a short panel on choices and realized outcomes. We establish identification of the outcome equation parameters and the distribution of the three types of unobservables, under the standard assumption that unknown heterogeneity and uncertainty are normally distributed. We also show that, absent known heterogeneity, the model is identified without making any distributional assumption. We then derive the asymptotic properties of a sieve MLE estimator for the model parameters, and devise a tractable profile likelihood based estimation procedure. Monte Carlo simulation results indicate that our estimator exhibits good finite-sample properties. |
| JEL: | C14 C50 D83 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32164&r=dcm |