nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2005‒06‒19
two papers chosen by
Philip Yu
Hong Kong University

  1. Discrete choice models of labour supply, behavioural microsimulation and the Spanish tax reform. By José M. Labeaga; Xisco Oliver; Amedeo Spadaro
  2. Nash rationalizability of collective choice over lotteries By T. DEMUYNCK; L. LAUWERS

  1. By: José M. Labeaga; Xisco Oliver; Amedeo Spadaro
    Abstract: In this paper, we demonstrate the potential of behavioural microsimulation models as powerful tools for the ex ante evaluation of public policies. The subject of our analysis is the impact of recent Spanish Income Tax reforms on efficiency and household and social welfare. We also analyze the likely effects of some basic income - flat tax and vital minimum - flat tax schemes. The analysis is carried out using a microsimulation model in which labour supply is explicitly taken into account. Instead of following the traditional continuous approach (Hausman 1981, 1985a, and 1985b), we estimate the direct utility function using the methodology proposed by Van Soest (1995). Our data come from a sample of Spanish individuals in the 1995 wave of the EC Household Panel. We show that in the Spanish case, the redistribution policies considered have only little impact on the efficiency of the economy. On the contrary, they strongly affect social welfare.
    Date: 2005
    Abstract: To test the joint hypothesis that players in a noncooperative game (allowing mixed strategies) maximize expected utilities and select a Nash equilibrium, it suffices to study the reaction of the revealed collective choice upon changes in the space of strategies available to the players. The joint hypothesis is supported if the revealed choices satisfy an extended version of Richter’s congruence axiom together with a contraction-expansion axiom that models the noncooperative behavior. In addition, we provide sufficient and necessary conditions for a binary relation to have an independent ordering extension, and for individual choices over lotteries to be rationalizable.
    Keywords: independence condition, binary extensions, rationalizability, Nash equilibrium in mixed strategies
    JEL: C72 C92
    Date: 2005–04

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