nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒10‒13
seven papers chosen by
Philip Yu
Hong Kong University

  1. First Derivatives of the log-L for the multivariate probit model By Vargas Barrenechea, Martin
  2. An Empirical Investigation of the Determinants of the Location of Foreign Direct Investment in the Central and Eastern European Countries Using Multilevel Data By Simona Rasciute; Eric J. Pentecost; Helena I. Marques
  3. Starting-point bias and respondent uncertainty in dichotomous choice contingent valuation surveys By Emmanuel Flachaire; Guillaume Hollard
  4. Model selection in iterative valuation questions By Emmanuel Flachaire; Guillaume Hollard
  5. Extension of the Traditional Travel Cost Method to a Collective Framework: An Empirical Application By Marcella Veronesi; Martina Menon; Federico Perali
  6. On modified discriminant analysis By Marcin Owczarczuk
  7. The Link between Environmental Innovation, Patents, and Environmental Management By Marcus Wagner

  1. By: Vargas Barrenechea, Martin
    Abstract: In this work we found first derivatives for the log likelihood function of the multivariate probit model.
    JEL: C35 C63 C10
    Date: 2007–10–08
  2. By: Simona Rasciute (Dept of Economics, Loughborough University); Eric J. Pentecost (Dept of Economics, Loughborough University); Helena I. Marques (Dept of Economics, Loughborough University)
    Abstract: This paper employs a novel multi-level data set and a multinomial logit model - to examine the factors explaining 1,223 foreign investment location decisions by firms in the EU(15), Japan, Norway, Russia, Switzerland and the US in 12 Central and Eastern European countries (CEECs). The highly significant empirical results, based on a general underlying model of imperfect competition, show that the responsiveness of foreign direct investment in the CEECs to country-level variables differs significantly both across sectors and across firms of different sizes and profitability. In particular, in addition to the traditional importance of market size and distance, firm size and the effective corporate tax rate are also important for the location of investment.
    Keywords: Multi-level data, foreign direct investment, multinomial logit model
    JEL: F23 P33
    Date: 2007–09
  3. By: Emmanuel Flachaire (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Guillaume Hollard (OEP - [Universite de Marne la Vallee])
    Abstract: In this article, we develop a dichotomous choice model with follow-up questions that describes the willingness to pay being uncertain in an interval. The initial response is subject to starting point bias. Our model provides an alternative interpretation of the starting point bias in the dichotomous choice valuation surveys. Using the Exxon Valdez survey, we show that, when uncertain, individuals tend to answer "yes".
    Keywords: starting point bias ; preference uncertainty ; contingent valuation
    Date: 2007
  4. By: Emmanuel Flachaire (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Guillaume Hollard (OEP - [Universite de Marne la Vallee])
    Abstract: In this article, we propose a unified framework that accomodates many of the existing models for dichotomous choice contingent valuation with follow-up and allows to discriminate between them by simple parametric tests of hypothese. Our empirical results show that the Range model, developped in Flachaire and Hollard (2007}, utperforms other standard models and confirms that, when uncertain, respondents tend to accept proposed bids.
    Keywords: starting point bias ; preference uncertainty ; contingent valuation.
    Date: 2007–07
  5. By: Marcella Veronesi (Corresponding author, Università di Verona and University of Maryland; Dipartimento di Scienze economiche (Università di Verona) and Department of Agricultural and Resource Economics (University of Maryland)); Martina Menon (Università di Verona; Dipartimento di Scienze economiche (Università di Verona)); Federico Perali (Università di Verona; Dipartimento di Scienze economiche (Università di Verona))
    Abstract: This study proposes a novel approach to estimating a travel cost model that accounts for intrahousehold resource allocation. We define it ‘Collective Travel Cost Method’ (CTCM). The technique is based on an analogy borrowed from the literature of collective household behavior and adapted to the recreational setting. Knowledge of the travel cost to the recreational site of each household member allows us to identify the sharing rule within the household and to estimate a collective Almost Ideal Demand System that takes into account the role of each member’s preferences for consumption choices and how resources are allocated within the household. We show how to identify and estimate welfare measures, such as the equivalent variation (EV), to infer the Willingness-To-Pay (WTP) to access a natural park of each household member. Moreover, the development and estimation of the CTCM allows: (1) to test whether the WTP estimated by the traditional unitary TCM is significantly different from the WTP estimated by the CTCM; (2) to test whether two spouses have equal or different WTP to access the recreational site, and (3) whether the individual WTP estimated by the CTCM is significantly different from the WTP derived by applying the Contingent Valuation Method (CVM) on the same sample of individuals.
    Keywords: collective model, compensating variation, equivalent variation, revealed preferences, travel cost method, Willingness-To-Pay.
    JEL: D13 Q26 Q51
    Date: 2007–10
  6. By: Marcin Owczarczuk (Department of Applied Econometrics, Warsaw School of Economics)
    Abstract: Discriminant analysis is mostly used to predict the value of a discrete dependent variable of an observation on the basis of a set of predictors. The commonly used criterion of the predictive power is the fraction of incorrectly predicted cases in the sample. In this article we construct a model for a modified discriminant problem. Namely to find a subpopulation of a given size having the highest percentage of observations of a chosen class. Our model maximizes the following criterion of the predictive power: the fraction of observations from chosen class in the found subpopulation.
    Keywords: discriminant analysis, semiparametric estimation, smoothing, binary response
    JEL: C14 C35
    Date: 2007–05–22
  7. By: Marcus Wagner
    Abstract: This paper analyses empirically the relationship between environmental innovations, environmental management and patenting. In particular it tests a number of propositions on how environmental management systems and the interaction with environmentally more or less concerned stakeholders are associated with the probability of firms to pursue innovation in general (measured as patenting behaviour) and specifically environmental innovation (measured as firm self-assessment and based on patent data). In applying a negative binomial as well as binary discrete choice models the relationship is studied using data on German manufacturing firms. As a novel and important insight, the study finds that environmental innovation can be meaningfully identified using patent data and that environmental innovation defined this way is less ubiquitous than self-reported environmental innovation. It also reveals that the implementation level of environmental management systems has a positive effect exclusively on environmental process innovation, whereas it is negatively associated with the level of a firm’s general patenting activities. For environmental product innovation and patented environmental innovations a positive relationship with environ-mentally concerned and a negative link with environmentally neutral stakeholders is found.
    Keywords: Environmental innovations; patents
    JEL: O31 Q56
    Date: 2007

This nep-dcm issue is ©2007 by Philip Yu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.