nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2005‒10‒15
eight papers chosen by
Philip Yu
Hong Kong University

  1. Identification of binary choice models with social interactions By Brock,W.A.; Durlauf,S.N.
  2. Cumulative Dominance and Heuristic Performance in Binary Multi-attribute Choice By Manel Baucells; Juan A. Carrasco; Robin Hogarth
  3. Evaluating Alternative Representations of the Choice Sets in Models of Labour Supply By Ugo Colombino; Rolf Aaberge; Tom Wennemo
  4. Is Individual Environmental Consciousness One of the Determinants in Transport Mode Choice? By Junyi Shen; Yusuke Sakata; Yoshizo Hashimoto
  5. A Theoretical Model for Measuring the Influence of Accessibility in Residential Choice Behaviour By Berry Blijie
  6. The relative income hypothesis: does it exist over time? Evidence from the BHPS. By Lindley; Lorgelly
  7. What Makes Small and Medium Enterprises Competitive By Piergiuseppe Morone; Giuseppina Testa
  8. Currency crises in Asia: A multivariate logit approach By Jacobs, Jan P.A.M.; Kuper, Gerard H.; Lestano

  1. By: Brock,W.A.; Durlauf,S.N. (University of Wisconsin-Madison, Social Systems Research Institute)
    Date: 2004
  2. By: Manel Baucells; Juan A. Carrasco; Robin Hogarth
    Abstract: Several studies have reported high performance of simple decision heuristics multi-attribute decision making. In this paper, we focus on situations where attributes are binary and analyze the performance of Deterministic-Elimination-By-Aspects (DEBA) and similar decision heuristics. We consider non-increasing weights and two probabilistic models for the attribute values: one where attribute values are independent Bernoulli randomvariables; the other one where they are binary random variables with inter-attribute positive correlations. Using these models, we show that good performance of DEBA is explained by the presence of cumulative as opposed to simple dominance. We therefore introduce the concepts of cumulative dominance compliance and fully cumulative dominance compliance and show that DEBA satisfies those properties. We derive a lower bound with which cumulative dominance compliant heuristics will choose a best alternative and show that, even with many attributes, this is not small. We also derive an upper bound for the expected loss of fully cumulative compliance heuristics and show that this is moderate even when the number of attributes is large. Both bounds are independent of the values of the weights.
    Keywords: Multi-attribute decision making, binary attributes, DEBA, cumulative dominance, performance bounds
    JEL: D81 M10
    Date: 2005–09
  3. By: Ugo Colombino (CHILD, Department of Economics, Turin, Italy); Rolf Aaberge (Research Department, Statistics Norway, Oslo, Norway); Tom Wennemo (Research Department, Statistics Norway, Oslo, Norway)
    Abstract: During the last two decades, the discrete-choice modelling of labour supply decisions has become increasingly popular, starting with Aaberge et al. (1995) and van Soest (1995). Within the literature adopting this approach there are however two potentially important issues that are worthwhile analyzing in their implications and that up to know have not been given the attention that they might deserve. A first issue concerns the procedure by which the discrete alternative are chosen. For example Van Soest (1995) chooses (non probabilistically) a set of fixed points identical for every individual. This is by far the most widely adopted method. By contrast, Aaberge et al. (1995) adopt a sampling procedure and also assume that the choice set may differ across the households. A second issue concerns the availability of the alternatives. Most authors assume all the values of hours-of-work within some range [0, H] are equally available. At the other extreme, some authors assume only two or three alternatives (e.g. non-participation, part-time and full-time) are available for everyone. Aaberge et al. (1995) assume instead that not all the hour opportunities are equally available to everyone; they specify a probability density function of opportunities for each individual and the discrete choice set used in the estimation is built by sampling from that individual-specific density function. In this paper we explore by simulation the implications of - the procedure used to build the choice set (fixed alternatives vs sampled alternatives) - accounting vs not accounting for a different availability of alternatives. The way the choice set is represented seems to have little impact on the fitting of observed values, but a more significant and important impact on the prediction of policy effects.
    Keywords: Microeconometric Models, Discrete Choice, Choice Set, Labour Supply, Tax Reforms.
    JEL: C1 C2 C3 C4 C5 C8
    Date: 2005–10–13
  4. By: Junyi Shen (Osaka School of Interna ional Public Policy, Osaka University); Yusuke Sakata (School of Economics, Kinki University); Yoshizo Hashimoto (Osaka School of Interna ional Public Policy, Osaka University)
    Abstract: This paper models a transport negative impact on environment as one of attributes of the transport mode. By this modeling, we are able to examine whether individual environmental consciousness has a significant effect on his/her choice of transport mode. A survey data from Saito and Onohara Area in Northern Osaka of Japan is used to estimate the model specified by Heteroscedastic Extreme Value (HEV). Both of the estimated and simulated results imply that individual environmental consciousness does influence his/her decision on transport mode choice. Furthermore, the likelihood ratio tests suggest that both the utility and scale parameters are not equal across sub-samples of university commuters, research-facility commuters, and residents. The details of the comparison across sub-samples suggest that we may learn more from subdividing a whole sample into several sub-samples if we could select them based on their characteristics.
    Keywords: Environmental consciousness; Transport mode choice; Stated choice experiment; Heteroscedastic Extreme Value (HEV) model; Value of time saving (VOTS)
    JEL: C35 D12 Q51 R41
    Date: 2005–10
  5. By: Berry Blijie
    Abstract: Due to the renewed interest for Integrated Land-use and Transport models, the urge for sound models that describe the behaviour of the agents on the urban markets has grown. A preferred subject of study within this context is the empirical research into the influence of accessibility on the residential choice behaviour of households. However, despite of the effort of several researchers, this relationship seems hard to quantify. In this paper we present a theoretical design for a discrete choice model of the residential choice of households. From the existing knowledge from a literature review and new insights, we present a new approach for measuring the influence of accessibility on the residential choice process. This theoretical model exists of three main parts, namely: the unique information of households, the arrangement of households into certain destination groups and composing systematic choice sets to estimate a discrete choice model. Within this framework, an important role is set aside for the concept of subjective accessibility, being the individuals perception and utility of accessibility. Finally, we derived a Logit model that is able to combine the simultaneous influence of migration distance and commuting time.
    Date: 2004–08
  6. By: Lindley (University of Sheffiled); Lorgelly (University of East Anglia)
    Abstract: The relative income hypothesis suggests that income inequality has a detrimental affect on people’s health. This previously well accepted relationship has recently come under scrutiny. Some claim it is a statistical artefact, while others argue that aggregate level data are not sophisticated enough to adequately test for its existence. This paper adds to the debate by estimating the relationship between income inequality and health using panel data. A random effects ordered probit is used to estimate the relationship between net household income, regional income inequality and self-reported health, for 3736 individuals over 9 years, while controlling for individual socioeconomic characteristics like gender, social class and age. Significant differences in income inequality across regions and considerable changes in health are found across years, however, the panel data estimating regressions find no significant association between any of the measures of income inequality and self-reported health. Therefore, it would appear that the relative income hypothesis does not exist over time and does not exist within Britain.
    JEL: J
    Date: 2005–10–07
  7. By: Piergiuseppe Morone; Giuseppina Testa
    Abstract: : This paper aims at understanding the determinants of Italian small- and medium-sized enterprises’ competitiveness. Having in mind the fact that the Italian economic system relies substantially on small firms which have managed to stay competitive by adopting strategies such as the creation of well-integrated social and institutional clusters (the so-called industrial districts) or specialising in the production of quality goods (the so called made in Italy). However, the growing competing pressure coming from the Far East has rendered this production system vulnerable, challenging its internationally competitiveness. By developing a conceptual model we identify the sources of competitiveness of Italian SMEs. The model is tested using a unique database which collects data, for the year 2004, over a sample of 2,600 SMEs.
    Keywords: SMEs, competitiveness, innovation, interval regression, ordered probit
    JEL: L1 O31 C24
    Date: 2005–09
  8. By: Jacobs, Jan P.A.M.; Kuper, Gerard H.; Lestano (Groningen University)
    Abstract: Indicators of financial crisis generally do not have a good track record. This paper presents an early warning system (EWS) for six countries in Asia in which indicators do work. Our binary choice model, which has been estimated for the period 1970:01–2001.12, has the following features. We extract a full list of currency crisis indicators from the literature, apply factor analysis to combine the indicators, and introduce dynamics. The quality of the EWS is assessed both in-sample and out-of-sample. We find that money growth (M1 and M2), national savings, and import growth correlate with currency crises.
    Date: 2005

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