nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2006‒05‒20
ten papers chosen by
Philip Yu
Hong Kong University

  1. R&D lab location. Evidence from the French case By Corinne Autant-Bernard
  2. Justifying Functional Forms in Models for Transitions between Discrete States, with Particular Reference to Employment-Unemployment Dynamics By Dagsvik, John K.
  3. Female Labor Market Transitions in Europe By Lutz C. Kaiser
  4. Risk Aversion and Human Capital Investment: a Structural Econometric Model By Thomas Brodaty; Robert Gary-Bobo; Ana Prieto
  5. Can Risk Aversion Explain Schooling Attainments? Evidence from Italy By Christian Belzil; Marco Leonardi
  6. Crime and Young Men: The Role of Arrest, Criminal Experience, and Heterogeneity By Susumu Imai; Hajime Katayama; Kala Krishna
  7. On Nash equilibrium in prices in an oligopolistic market with demand characterized by a nested multinomial logit model and multiproduct firm as nest By Gang Liu
  8. "Bayesian Estimation of Demand Functions under Block Rate Pricing" By Koji Miyawaki; Yasuhiro Omori; Akira Hibiki
  9. Investigating the Characteristics of Stated Preferences for Reducing the Impacts of Air Pollution: A Contingent Valuation Experiment By Ian J. Bateman; Michael P. Cameron; Antreas Tsoumas
  10. Pre-Commitment and Flexibility in a Time Decision Experiment. By Casari, Marco

  1. By: Corinne Autant-Bernard (CREUSET (EA 3724) - Centre de Recherche Economique de l'Université de Saint Etienne - [Université Jean Monnet - Saint-Etienne])
    Abstract: The purpose of this paper is to empirically investigate how regional advantages and firms characteristics influence the location of R&D. Looking at 2024 decisions of R&D lab location in France, we implement an extended conditional logit with spatially lagged explanatory variables to evaluate the importance of each factor and to test the spatial dimension of knowledge spillovers. The results indicate that large market size, large amount of ideas, and low level of competition in the target region increases the probability of setting up R&D labs while the diffusion of knowledge across regions induces a significant spatial dependence
    Keywords: Economic geography; Location choice; Knowledge spillovers; Spatial dependence; géographie économique; externalités de connaissance; choix de localisation; dépendance spatiale
    Date: 2006–04–21
  2. By: Dagsvik, John K. (Research Department, Statistics Norway and the Ragnar Frisch Centre for)
    Abstract: This paper proposes a particular axiomatic approach to motivate the choice of functional forms and distribution of unobservables in continuous time models for discrete panel data analysis. We discuss in particular applications with data on transitions between employment and unemployment. This framework yields a characterization of transition probabilities and duration distributions in terms of structural parameters of the utility function and choice constraints. Moreover, it is discussed how the modeling framework can be extended to allow for involuntary transitions, structural state dependence and random effects.
    Keywords: Discrete choice in continuous time; Duration of unemployment/employment; Random utility models; Functional form; Invariance principles
    JEL: C23 C25 C41
    Date: 2006–04–25
  3. By: Lutz C. Kaiser (IZA Bonn, DIW Berlin and EPAG)
    Abstract: Using micro panel data, labor market transitions are analyzed for the EU-member states by cumulative year-by-year transition probabilities. As female (non-)employment patterns changed more dramatically than male employment in past decades, the analyses mainly refer to female labor supply. In search for important determinants of these transitions, six EUcountries with different labor market-regimes are selected as examples (Denmark, Germany, Netherlands, Portugal, Ireland, UK). Within these countries, women’s determinants of labor market transitions are compared by means of pooled multinominal logit-regressions. The outcomes hint at both, the importance of socio-economic determinants, like the life cycle or human capital, but also address gender related differences in the paths of labor market transitions. Clearly, the observed cross-national differences are driven by specific national institutional settings. Among others, one of the most crucial features is the day-care infrastructure concerning children, which either fosters or restricts a sustainable risk management between family and work in the respective countries.
    Keywords: labor supply, labor market transitions, socio-economic determinants, institutional settings, risk management, cross-national comparison
    JEL: J21 J22 J78
    Date: 2006–05
  4. By: Thomas Brodaty (THEMA, Université de Cergy-Pontoise); Robert Gary-Bobo (Université de Paris 1, IDEP and CEPR); Ana Prieto (THEMA, Université de Cergy-Pontoise)
    Abstract: We propose to model individual educational investments as a rational decision, maximizing expected utility, conditional on some characteristics observed by the student, under the combined risks affecting future wages and schooling duration. Assuming that students' attitudes toward risk can be represented by a CRRA utility, we show that the risk-aversion parameter can be identified in a natural way, using the variation in school-leaving ages, conditional on certified educational levels. Estimation can be performed by means of classic Maximum Likelihood methods. The model can easily be compared with a non-structural, simplified version, which is a standard wage equation with endogenous dummy variables representing education levels, education levels being themselves determined by an Ordered Probit model. We find small but significant values of the coefficient of relative risk aversion, between 0:1 and 0:9. These results are obtained with a rich sample of 12,500 young men who left the educational system in 1992, in France.
    Date: 2006–03–15
  5. By: Christian Belzil (CNRS-GATE, CIRANO and IZA Bonn); Marco Leonardi (University of Milan and IZA Bonn)
    Abstract: Using unique Italian panel data, in which individual differences in behavior toward risk are measured from answers to a lottery question, we investigate if (and to what extent) risk aversion can explain differences in schooling attainments. We formulate the schooling decision process as a reduced-form dynamic discrete choice. The model is estimated with a degree of flexibility virtually compatible with semi-parametric likelihood techniques. We analyze how grade transition from one level to the next varies with preference heterogeneity (risk aversion), parental human capital, socioeconomic variables and persistent unobserved (to the econometrician) heterogeneity. We present evidence that schooling continuation probabilities decrease with risk aversion at low grade levels, but increase with risk aversion at the time when the decision to enter higher education is made. However, differences in attitudes toward risk account for a modest portion of the probability of entering higher education. Differences in parental human capital and ability(ies) are much more important.
    Keywords: risk aversion, education, human capital, dynamic discrete choices
    JEL: J24
    Date: 2006–05
  6. By: Susumu Imai; Hajime Katayama; Kala Krishna
    Abstract: Using National Youth Survey (NYS) data, we examine the relationship of current criminal activity and past arrests using an ordered probit model with unobserved heterogeneity. Past arrests raise current criminal activity only for the non-criminal type, while past criminal experience raises current criminal activity for both types. Also, the age crime profile peaks at age 18 for non-criminal type individuals, but for criminal type individuals, it continues to rise with age. Past research indicates that age arrest profiles rise till age 18 and then fall for both types, suggesting lower apprehension rates for criminal type individuals.
    JEL: K42 J24
    Date: 2006–05
  7. By: Gang Liu (Statistics Norway)
    Abstract: This note provides a proof on existence and uniqueness of Nash equilibrium in prices in a market where the demand side is characterized by a nested multinomial logit model with multiproduct firm as nest and the supply side consists of oligopolistic price-setting multiproduct firms with each producing various differentiated variants.
    Keywords: oligopolistic market; multiproduct firm; nested multinomial logit model; Nash equilibrium
    JEL: C25 C62 C72 D43 L13
    Date: 2006–04
  8. By: Koji Miyawaki (Graduate School of Economics, University of Tokyo); Yasuhiro Omori (Faculty of Economics, University of Tokyo); Akira Hibiki (National Institute for Environmental Studies and Department of Social Engineering, Tokyo Insitute of Technology)
    Abstract: This article proposes a Bayesian estimation method of the demand function under block rate pricing, mainly focusing on increasing block rat epricing. Block rate pricing is often observed in public sectors, such as water and electricity. Under this price structure, price changes when consumption exceeds a certain threshold, and the demand function is subject to a piece wise-linear budget constraint. We apply a discrete/continuous choice model to analyze household behavior with such a price system and take a hierarchical Bayesian approach to estimate its demand function. Moreover, a separability condition is additionally considered to obtain proper estimates. The model is extended to allow random coe?cients for panel data and spatial correlation to account for consumer heterogeneity of spatial data. The proposed method is applied to estimate the Japanese residential water demand function under increasing block rate pricing.
    Date: 2006–05
  9. By: Ian J. Bateman (University of East Anglia); Michael P. Cameron (University of Waikato); Antreas Tsoumas (University of the Aegean)
    Abstract: This paper investigates the nature of stated preferences for reducing air pollution impacts. Specifically a contingent valuation (CV) experiment is designed to elicit individuals’ values for reducing these impacts and to examine how these may change when multiple schemes for reducing differing impacts are valued. The novel survey design allows simultaneous testing for the presence of several anomalies reported in the CV literature within the same context, including (i) scope sensitivity (ii) part-whole or substitution effects (iii) ordering effects and (iv) visible choice set effects. Results indicate some scope sensitivity and interaction between ordering effects and visible choice set effects, as well as substantial part-whole or substitution effects between two exclusive schemes. A practical consequence of these findings is that estimates of the value of combined programmes may not readily be obtained by summing the values of their constituent parts obtained using the CV method.
    Keywords: air pollution; contingent valuation; stated preferences; part-whole effect; experimental surveys
    JEL: C42 C90 Q51 Q53
    Date: 2006–05–11
  10. By: Casari, Marco
    Abstract: This study presents experimental data on pre-commitment and flexibility where monetary rewards are delivered with an actual delay. Preference for pre-commitment is defined as willingness to pay a cost to restrict the size of the choice set available in the future. Preference for flexibility is defined as willingness to pay a cost to enlarge the choice set available in the future. The existing empirical evidence about these phenomena is rather limited. On the other hand, models of intertemporal choice differ widely on these issues, with some predicting only demand for pre-commitment, others only demand for flexibility, while others neither one. We find that two-thirds of the subjects cannot be accounted for with the canonical exponential discounting model and that there is demand for both pre-commitment and flexibility.
    Keywords: experiments ; time preferences ; time inconsistency ; preference for commitment ; preference for flexibility ; discounting
    JEL: C91 D90 D81
    Date: 2006–03

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