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on Discrete Choice Models |
| By: | Yilong Xu (Utrecht University); Mikolaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); Nick Hanley (University of Glasgow); Leonhard Lades (University of Stirling); Charles N. Noussair (University of Arizona); Steven Tucker (University of Waikato) |
| Abstract: | A large literature in behavioral science suggests that people’s emotional condition can have an impact on their choices. We consider how people’s emotions affect their stated preferences and willingness to pay for changes in environmental quality, focusing on the effects of incidental emotions. We use videos to induce emotional states and test the replicability of the results reported in Hanley et al. (2017). Additionally, we employ Face Reader software to verify whether the intended emotional states were successfully induced in our experimental treatments. We find that our treatments succeed in implementing the predicted emotional condition in terms of self-reported emotions, but had a variable effect on measured (estimated) emotional states. We replicate the key result from Hanley et al. (2017): induced emotional state has no significant effect on stated preference estimates or on willingness to pay for environmental quality changes. Moreover, we confirm that, irrespective of the treatment assignment or emotional state - be it self-reported or measured - we observe no significant effect of emotion on stated preferences. We conclude that stated preference estimates for environmental change are unaffected by changes in incidental emotions, and that preference estimates are robust to the emotional state of the responder. |
| Keywords: | behavioural economics, choice experiments, emotions, stated choice, experimental economics |
| JEL: | D01 D12 Q51 C91 D90 Q56 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2024-19 |
| By: | Turlo, Sergey; Fina, Matteo; Kasinger, Johannes (Tilburg University, School of Economics and Management); Laghaie, Arash; Otter, Thomas |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiutis:24894409-70a9-4920-9d3c-bc2eb9493819 |
| By: | Järnberg, Linda Andersson; Andrén, Daniela; Börjesson, Maria; Hultkrantz, Lars; Rutström, Eva E.; Vimefall, Elin |
| Abstract: | This study analyzes how the willingness to pay (WTP) for a risk reduction for traffic accidents varies depending on the specific traffic safety measures and whether they are framed as public or private goods. Building on previous studies, we designed and conducted a contingent valuation survey targeting a representative sample of the Swedish population, assessing WTP for eight different measures aimed at increasing the safety of vulnerable road users. Our findings reveal that while keeping the risk reduction constant, WTP is higher for well-established traffic safety measures, such as anti-slip treatments and improved lighting. Conversely, new technologies, like mobile apps and sensors, elicit lower WTP. However, respondents express a higher WTP when these technological measures are provided as a public good. These results suggest that acceptance and perceived reliability of the measures significantly influence WTP. The findings have important implications for cost-benefit analyses and evidence-based policymaking in transportation safety, particularly regarding the implementation of new technology in road safety infrastructure. |
| Keywords: | traffic safety, willingness to pay, public good, private good, infrastructure, bicyclists and pedestrians, interval regression |
| JEL: | R41 D12 H41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1538 |
| By: | Bhattacharya, D.; Oparina, E.; Xu, Q. |
| Abstract: | We analyze demand settings where heterogeneous consumers maximize utility for product attributes subject to a nonlinear budget constraint. We develop nonparametric methods for welfare-analysis of interventions that change the constraint. Two new findings are Roy’s identity for smooth, nonlinear budgets, which yields a Partial Differential Equation system, and a Slutsky-like symmetry condition for demand. Under scalar unobserved heterogeneity and single-crossing preferences, the coefficient functions in the PDEs are nonparametrically identified, and under symmetry, lead to path-independent, money-metric welfare. We illustrate our methods with welfare evaluation of a hypothetical change in relationship between property rent and neighborhood school-quality using British microdata. |
| Keywords: | Hedonic Model, Nonlinear Budget, Nonparametric Identification, Welfare, Compensating/Equivalent Variation, Partial Differential Equation, Slutsky Symmetry, Roy’s Identity, Path Independence |
| JEL: | C14 I30 H23 |
| Date: | 2024–12–09 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2468 |
| By: | Menta, Giorgia (LISER); Piccari, Michela (Sapienza University of Rome); Verheyden, Bertrand (LISER) |
| Abstract: | With growing emphasis on sustainable practices, carbon taxes and congestion charges are emerging as key tools to reduce greenhouse gas emissions and improve air quality, yet they often face public resistance. Using longitudinal data from a randomized survey experiment in Luxembourg, this paper investigates whether providing relevant information about these two green mobility policies influences pro-environmental attitudes (stated support and willingness to pay for the carbon tax) and behaviors (carbon offsetting donations). The first treatment, which informs participants that public support for urban congestion charges tends to increase after implementation, has little to no effect. In contrast, information on the use of carbon tax revenues (redistribution and energy-efficient investments) has a large positive impact on both stated and revealed pro-environmental preferences. Our results indicate that support for the carbon tax is more elastic to information on its redistributive aspect, rather than on its use for funding green projects. Additionally, constraints to behavioral change and pre-treatment environmental attitudes play a role in treatment response heterogeneity, and show that confirmation bias can moderate responses to information, especially among those skeptical of climate science. |
| Keywords: | survey experiment, climate policy, carbon tax, preferences, taxation, Luxembourg |
| JEL: | D83 H23 H31 Q58 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17578 |
| By: | Junlong Feng; Sokbae (Simon) Lee |
| Abstract: | We introduce a novel framework for individual-level welfare analysis. It builds on a parametric model for continuous demand with a quasilinear utility function, allowing for heterogeneous coefficients and unobserved individual-good-level preference shocks. We obtain bounds on the individual-level consumer welfare loss at any confidence level due to a hypothetical price increase, solving a scalable optimization problem constrained by a novel confidence set under an independence restriction. This confidence set is computationally simple and robust to weak instruments, nonlinearity, and partial identification. The validity of the confidence set is guaranteed by our new results on the joint limiting distribution of the independence test by Chatterjee (2021). These results together with the confidence set may have applications beyond welfare analysis. Monte Carlo simulations and two empirical applications on gasoline and food demand demonstrate the effectiveness of our method. |
| Date: | 2024–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:azt:cemmap:25/24 |
| By: | Mehta, Yashree |
| Abstract: | An exploratory visit to the rural-urban interface of Bengaluru city revealed that dairy producers with larger herd size and potentially stable income preferred to sell to the cooperative whereas those producers with minuscule herd size (upto two cattle) stated a preference to sell to urban customers in the private market. Sales in the private market were uncertain due to volatile demand but they fetched a higher price than the cooperative per transaction. Given that producers in the latter category were highly cash strapped and needed cash for fulfilling their transaction demand, the stated preferences can be attributed to liquidity concerns on part of the producers. This sets a hypothesis for quantitative research on income stability as a determinant of market choice by dairy producers. This paper provides the linkages between such observed market preferences and the understanding of the producers' and consumers' resilience in terms of food security as well as an understanding of the ethical principles of social embeddedness and moral economy in the context of the production system. |
| Keywords: | Dairy farming, Direct sales, Agricultural cooperative, Revealed preferences, India |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:daredp:308054 |
| By: | Schubert, Torben; Kroll, Henning; Karaulova, Maria; Blind, Knut |
| Abstract: | This paper analyses the factual effects of new public management governance on academics' job choice. Based on a large-scale choice experiment carried out with faculty from Germany's nine leading technical universities, we find that working environments characterised by levels of administrative burden and high expectations concerning third party funding acquisition are detrimental to self-actualisation and hence tend to repel potential candidates. More specifically, we find this effect to be most pronounced for those candidates that universities would be strategically most interested in: researchers with a strong track record and an interdisciplinary profile. Not denying potential benefits of external incentives for existing faculty, we therefore suggest to acknowledge intrinsic motivation as the key driving factor of academics choices and to design future governance structures accordingly. |
| Keywords: | Choice Experiment, German Researchers, Fraunhofer ISI |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fisidp:306353 |
| By: | Akbas, Ozan E. (Warwick Business School, University of Warwick); Wang, Ao (Department of Economics, University of Warwick and CAGE Research Centre) |
| Abstract: | Investors evaluate their entire portfolio, not individual assets, striving to balance returns and risks through effective diversification. This paper introduces a flexible demand system accommodating heterogeneous substitution, cross-asset complementarities, and diverse investment strategies. By relaxing multinomial logit assumptions, our model better captures portfolio allocation decisions, linking portfolio weights to both individual asset and portfolio-wide characteristics. We propose a demandinverse approach for the identification of structural parameters. This approach implies a Generalized Method of Moments estimation procedure with novel instruments addressing cross-asset dependencies. Monte Carlo simulations validate the model, demonstrating improved finite-sample properties over standard multinomial logit frameworks. JEL Codes: C51 ; G11 ; G23 |
| Keywords: | asset demand systems ; flexible substitution ; cross-asset complementarity |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1533 |
| By: | Mugnier, Martin (Paris School of Economics); Wang, Ao (University of Warwick and CAGE Research Centre) |
| Abstract: | We study a class of two-way fixed effects index function models with a nonparametric link function and individual- (or time-) specific slopes. Our model alleviates potential misspecification errors due to the common practice of specifying a known link function such as Gaussian and its tail behavior. It also enables to incorporate richer unobserved heterogeneity in the marginal effects of covariates via heterogeneous slopes across individuals. We show the identification of the link function as well as the slopes and fixed effects parameters when both individual and time dimensions are large. We propose a nonparametric consistency result for the fixed effects sieve maximum likelihood estimators. Finally, we apply our method to the study of establishing exportation and illustrate the consequences of imposing Gaussian link function and homogeneity on the slope of distance. |
| Keywords: | Nonlinear Panel Models ; Fixed Effects ; Slope Heterogeneity ; Nonparametric ; Sieve JEL Codes: C23 ; C24 ; C25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1531 |
| By: | De Groote, Olivier; Rho, Minyoung |
| Abstract: | We use data from a platform that centralizes a day care matching process. We estimate parents’ preferences and nursery priorities by analyzing parents’ rank-ordered lists and nurseries’ acceptance decisions. We account for strategic behavior by using a novel estimation approach inspired by the dynamic discrete choice framework. We use the estimates to evaluate centralized matching policies tailored to the day care setting. We compare mechanisms and assess the effects of subsidies, increased capacity, and affirmative action. We find that affirmative action policies are crucial for boosting the participation of disadvantaged children, though they increase segregation due to location-based preferences. |
| Keywords: | day care, affirmative action, segregation, centralized matching markets, CCP estimation |
| JEL: | C61 D82 I24 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129960 |
| By: | Max R. P. Grossmann |
| Abstract: | This paper studies the relationship between soft and hard paternalism by examining two kinds of restriction: a waiting period and a hard limit (cap) on risk-seeking behavior. Mandatory waiting periods have been instituted for medical procedures, gun purchases and other high-stakes decisions. Are these policies substitutes for hard restrictions, and are delayed decisions more respected? In an experiment, decision-makers are informed about an impending high-stakes decision. Treatments define when the decision is made: on the spot or after one day, and whether the initial decision can be revised. In a general population survey experiment, another class of subjects (Choice Architects) is granted the opportunity to make rules for decision-makers. Given a decision's temporal structure, Choice Architects can decide on a cap to the decision-maker's risk taking. In another treatment, Choice Architects can implement a mandatory waiting period in addition to the cap. This allows us to study the substitutional relationship between waiting periods and paternalistic action and the effect of deliberation on the autonomy afforded to the decision-maker. Our highly powered experiment reveals that exogenous deliberation has no effect on the cap. Moreover, endogenously prescribed waiting periods represent add-on restrictions that do not substitute for the cap. Choice Architects believe that, with time, the average decision-maker will take less risk and -- because of the distribution of Choice Architects' bliss points -- come closer to Choice Architects' subjective ideal choice. These findings highlight the complementarity of policy tools in targeting various parts of a distribution of decision-makers. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.00863 |
| By: | Nobuyuki Hanaki; Bolin Mao; Tiffany Tsz Kwan Tse; Wenxin Zhou |
| Abstract: | This study examined participants’ willingness to pay for stock price forecasts provided by an algorithm, financial experts, and peers. Participants valued algorithmic advice more highly and relied on it as much as expert advice. This preference for algorithms – despite their similar or even lower performance – suggests a shift in perception, particularly among students, toward viewing AI as a reliable and valuable source. However, this “algorithm appreciation” reduced participants’ payoffs, as they overpaid for advice that did not sufficiently enhance performance. These findings underscore the need to develop tools and policies that enable individuals to better assess algorithm performance. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1268 |
| By: | Lukasz Grzybowski (University of Warsaw, Faculty of Economic Sciences); Valentin Lindlacher (TU Dresden); Onkokame Mothobi (University of Witwatersrand) |
| Abstract: | In this paper, we investigate the effects of non-exclusive agreements between networks of mobile money agents on mobile network operator choices, using survey data from Tanzania conducted in 2017. By combining survey responses with geo-location data and information on agent proximity, we employ discrete choice models to analyze consumers’ decisions in subscribing to mobile network operators and their corresponding mobile money providers. Our findings highlight the significant influence of the distance to mobile money agents on consumers’ subscription choices. To explore the impact of interoperability (non-exclusivity) at the mobile money agent level, where consumers can use the nearest agent from any mobile money provider, we assess its effects on market shares of mobile network operators. Our results indicate that interoperability at the agent level has only a minor impact on market shares. Smaller operators experience marginal gains as their consumers can now utilize agents of larger providers, which are often closer in proximity. In conclusion, we find that interoperability at the agent level does not considerably alter the market structure in the context Tanzania during the period under consideration. |
| Keywords: | Mobile money, interoperability |
| JEL: | O16 O18 O33 L86 L96 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2024-22 |
| By: | Claude DIEBOLT (BETA/CNRS, Université de Strasbourg); Magali JAOUL-GRAMMARE (BETA/CNRS, Université de Strasbourg) |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:afc:wpaper:05-24 |
| By: | Daniel Rondeau (University of Victoria); Christian A. Vossler (Department of Economics, University of Tennessee) |
| Abstract: | Answers to valuation questions in stated preference surveys can be analyzed as economic decisions only if respondents believe their choice(s) are consequential (i.e., can affect their welfare). The empirical evidence we review indicates that the information content of surveys can significantly influence consequentiality beliefs, and controlling for beliefs can impact welfare estimates and improve validity. The review also uncovers several opportunities to improve upon current practices. First, most surveys do not deploy incentive compatible mechanisms that provide respondents with the correct incentives to truthfully reveal their preferences. Second, existing consequentiality measures do not fully capture consequentiality and are challenging to interpret. Finally, studies do not generally measure or control for other beliefs required to ensure that estimated value are consistent with economic theory. Hence, we provide a theoretical framework that links incentive compatibility conditions to a respondent’s beliefs about these conditions. This motivates a theory-driven proposal to improve belief elicitation and foster greater validity of survey results. |
| Keywords: | Stated Preferences; Consequentiality; Incentive Compatibility; Mechanism Design; Belief Elicitation; Validity |
| JEL: | H21 H23 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:ten:wpaper:2024-02_1 |
| By: | Handy, Susan; Kim, Keuntae; Byrd, Daniel |
| Abstract: | The goal of this project was to assess the capabilities of the travel demand forecasting models (TDMs) used by California’s metropolitan planning organizations (MPOs) with respect to forecasting the increase in vehicle miles of travel induced by highway capacity expansion. An expert panel assisted with the development of review questions to be used in assessing the models. These questions were used to assess each of the models currently used by the eighteen MPOs in California based on information found in readily available documents. The assessment found that seven MPOs are using activity-basedmodels, nine are using four-step, trip-based models, and two are using hybrid models. In general, the activity-based models do a better job of capturing possible induced travel effects. Only one model includes explicit feedback between the transportation system and land use patterns. The readily-available documentation of travel demand forecasting models in California is insufficient for fully understanding the variables included in each model component and the structure of feedbacks between components of the models. View the NCST Project Webpage |
| Keywords: | Social and Behavioral Sciences, Travel demand forecasting, travel demand models, induced travel |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt0wc735mj |
| By: | N. Bradley Fox; Benjamin Bruyns |
| Abstract: | The standard voting methods in the United States, plurality and ranked choice (or instant runoff) voting, are susceptible to significant voting failures. These flaws include Condorcet and majority failures as well as monotonicity and no-show paradoxes. We investigate alternative ranked choice voting systems using variations of the points-based Borda count which avoid monotonicity paradoxes. These variations are based on the way partial ballots are counted and on extending the values of the points assigned to each rank in the ballot. In particular, we demonstrate which voting failures are possible for each variation and then empirically study 421 U.S. ranked choice elections conducted from 2004 to 2023 to determine the frequency of voting failures when using five Borda variations. Our analysis demonstrates that the primary vulnerability of majority failures is rare or nonexistent depending on the variation. Other voting failures such as truncation or compromise failures occur more frequently compared to instant runoff voting as a trade-off for avoiding monotonicity paradoxes. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.00618 |
| By: | Goulas, Sofoklis (Brookings Institution) |
| Abstract: | This study explores the preference for remote work by sending thousands of randomized messages to tutors advertising on an online platform across Greece. The messages requested either in-person or online tutoring. Requests for online lessons were roughly 50 percent more likely to receive a callback (10.7 vs. 7.3 percent). Female tutors, STEM tutors, and those in high-competition areas showed stronger preferences for online lessons. Tutors favoring remote work also demanded higher premiums for in-person sessions. Survey findings suggest that online tutoring aligns with higher job satisfaction, more employment opportunities, improved instructional effectiveness, and increased tutoring hours. |
| Keywords: | remote work, wages, in-person wage premium, online learning, tutoring, experiment |
| JEL: | J2 J3 J4 J6 C93 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17592 |
| By: | Mohammad R. Jahan-Parvar; Charles Knipp; Pawel J. Szerszen |
| Abstract: | We propose a generalized multivariate unobserved components model to decompose macroeconomic data into trend and cyclical components. We then forecast the series using Bayesian methods. We document that a fully Bayesian estimation, that accounts for state and parameter uncertainty, consistently dominates out-of-sample forecasts produced by alternative multivariate and univariate models. In addition, allowing for stochastic volatility components in variables improves forecasts. To address data limitations, we exploit cross-sectional information, use the commonalities across variables, and account for both parameter and state uncertainty. Finally, we find that an optimally pooled univariate model outperforms individual univariate specifications, andperforms generally closer to the benchmark model. |
| Keywords: | Bayesian estimation; Maximum likelihood estimation; Online forecasting; Out-of-sample forecasting; Parameter uncertainty; Sequential Monte Carlo methods; Trend-cycle decomposition |
| JEL: | C11 C22 C32 C53 |
| Date: | 2024–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-100 |
| By: | Mateo Velásquez-Giraldo |
| Abstract: | Survey measurements of households’ expectations about U.S. equity returns show substantial heterogeneity and large departures from the historical distribution of actual returns. The average household perceives a lower probability of positive returns and a greater probability of extreme returns than history has exhibited. I build a life-cycle model of saving and portfolio choices that incorporates beliefs estimated to match these survey measurements of expectations. This modification enables the model to greatly reduce a tension in the literature in which models that have aimed to match risky portfolio investment choices by age have required much higher estimates of the coefficient of relative risk aversion than models that have aimed to match age profiles of wealth. The tension is reduced because beliefs that are more pessimistic than the historical experience reduce people’s willingness to invest in stocks. |
| Keywords: | Consumption and Saving; Heterogeneous Beliefs; Life cycle dynamics; Portfolio choice |
| JEL: | G11 G40 G51 G53 E21 D15 |
| Date: | 2024–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-97 |
| By: | Rowangould, Gregory; Ahmadnia, Narges; Nelson, Clare; Quallen, Erica; Clarke, Julia |
| Abstract: | Smaller and rural communities are often automobile dependent, a fact that has raised considerable concerns about the equity and effectiveness of market-based climate strategies including carbon taxes and carbon cap and trade schemes in rural states like Vermont. A lack of research and data describing how people in smaller and rural communities respond to changes in transportation costs is a critical gap to informing the design of market-based greenhouse gas mitigation policies and evaluating their potential outcomes. This report describes several related studies that focus on understanding the opportunities and constraints that people face in changing how they travel in small and rural communities in Vermont and also evaluates the equity implications of gas tax alternatives. The research is informed by data collected by the researcher team from interviews, surveys and unique administrative datasets. Findings show that urban, suburban, and rural households all made significant travel adjustments in response to higher gas prices. Urban households were more likely to substitute their mode of transportation or move, and rural households were more likely to adopt an electric vehicle (EV); however, most people in all community types were able to reduce the amount they travel by making fewer or shorter trips. Greater accessibility and more transit options were noted as barriers to change in all communities studied. Significant concerns about the feasibility of EVs were common and also shared across all communities. Overall, these findings suggest that market-based climate policies could be effective, even in smaller and rural communities. The authors also find that many people misunderstand how the gas tax is collected and what it funds, resulting in widely held beliefs that a mileage base fee alternative would be unfair, particularly to rural households. Using motor vehicle registration and inspection records, the researchers demonstrate that a mileage based user fee would be somewhat less regressive than the current gas tax and also less costly than the gas tax to rural households on average in Vermont. They also find that providing simple, factual, information about the gas tax and alternatives can significantly shift public support for gas tax alternatives in Northern New England. View the NCST Project Webpage |
| Keywords: | Social and Behavioral Sciences, Travel behavior, rural, travel cost, mode choice, mileage fee |
| Date: | 2024–12–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:itsdav:qt03w2v8h7 |