nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2005‒02‒27
two papers chosen by
Philip Yu
Hong Kong University

  1. Logit estimation of conditional cooperation in a repeated public goods experiment By Luis G. Gonzalez; Vittoria Levati; Graciela Gonzalez-Farias
  2. Are Illegal Drugs Inferior Goods? By Suryadipta Roy

  1. By: Luis G. Gonzalez; Vittoria Levati; Graciela Gonzalez-Farias
    Abstract: A conditional cooperator in a public goods game wants to match his partners' expected contribution. We investigate theoretically and empirically, whether (and to what extent) conditional cooperation can explain how individual contributions evolve in a repeated two-person public goods experiment using a perfect strangers design. To identify a random utility model including non-pecuniary preferences we also elicit participants' beliefs. Our econometric results show that the distribution of preferences in the population can be captured by a latent-class mixed logit specification with three subpopulations, and that 55 % of participants can be regarded as conditional cooperators. Thus, the decline in average contribution levels may be attributed to the presence of conditional cooperators who have to revise their expectations about the others' behavior.
  2. By: Suryadipta Roy (Department of Economics, West Virginia University)
    Abstract: Using data from the National Survey on Drug Use and Health, evidence of income inferiority in illegal drug consumption is presented. This is done by estimation of binary choice probit models with endogenous regressors. The simultaneity issue between drug consumption and income has been addressed by using a two-step estimation procedure. The results indicate that accounting for simultaneity shows income inferiority with regard to drug consumption. An implication of this study is that income distributive policies might be effective in controlling drug consumption. It also points out the regressive nature of the government’s substance abuse program.
    Keywords: income inferiority, illegal drugs, public policy
    JEL: H51 I12

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