nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2007‒11‒17
nine papers chosen by
Philip Yu
Hong Kong University

  1. Micro-level analysis of farmers' adaptation to climate change in Southern Africa: By Nhemachena, Charles; Hassan, Rashid
  2. The optimal management of wetlands: quantifying trade-offs between flood risks, recreation and biodiversity conservation By Ekin Birol; Nick Hanley; Phoebe Koundouri; Yiannis Kountouris
  3. Choice under Markovian Constraints By Leonardo Boncinelli
  4. Where do Personal Experience and Imitation Drive Choice? By Leonardo Boncinelli
  5. Global vs. Local Information By Leonardo Boncinelli
  6. The Value of Collective Reputation for Environmentally Friendly Production Methods: The Case of Val di Gresta By Ricardo Scarpa; Mara Thiene; Francesco Marangon
  7. Do Consumers’ Stated Preferences in Choice Models Depend on Differences in Stimulus Presentation: 2D versus 3D Presentation? By Alma Berneburg
  8. Holiday Destinations: Understanding the Travel Choices of Irish By Seán Lyons; Karen Mayor; Richard S.J. Tol
  9. Where do MNEs Expand Production: Location Choices of the Pharmaceutical Industry in Europe after 1992 By Frances Ruane; Xiaoheng Zhang

  1. By: Nhemachena, Charles; Hassan, Rashid
    Abstract: "Adaptation to climate change involves changes in agricultural management practices in response to changes in climate conditions. It often involves a combination of various individual responses at the farm-level and assumes that farmers have access to alternative practices and technologies available in the region. This study examines farmer adaptation strategies to climate change in Southern Africa based on a cross-section database of three countries (South Africa, Zambia and Zimbabwe) collected as part of the Global Environment Facility/World Bank (GEF/WB) Climate Change and African Agriculture Project. The study describes farmer perceptions to changes in long-term temperature and precipitation as well as various farm-level adaptation measures and barriers to adaptation at the farm household level. A multivariate discrete choice model is used to identify the determinants of farm-level adaptation strategies. Results confirm that access to credit and extension and awareness of climate change are some of the important determinants of farm-level adaptation. An important policy message from these results is that enhanced access to credit, information (climatic and agronomic) as well as to markets (input and output) can significantly increase farm-level adaptation. Government policies should support research and development on appropriate technologies to help farmers adapt to changes in climatic conditions. Examples of such policy measures include crop development, improving climate information forecasting, and promoting appropriate farm-level adaptation measures such as use of irrigation technologies." from Authors' Abstract
    Keywords: Climate change, Adaptation,
    Date: 2007
  2. By: Ekin Birol (Department of Land Economy, University of Cambridge, UK); Nick Hanley; Phoebe Koundouri; Yiannis Kountouris
    Abstract: This paper employs a choice experiment to estimate the value of management options for the Bobrek wetland in Poland. The local public’s valuation of several wetland management attributes, including flood risk reduction, biodiversity conservation and improvement of recreational access, are investigated. A latent class model and a covariance heterogeneity model are estimated to account for heterogeneity in the preferences of the local public. The results reveal that there is considerable preference heterogeneity across the local public; however on average they derive the highest values from reductions of flooding risk. The results of this study are expected to assist policy makers in undertaking effective flood risk reduction measures and formulating efficient, equitable and sustainable wetland management policies in accordance with the European Union Water Framework Directive (2000/60/EC).
    Keywords: choice experiment, latent class model, covariance heterogeneity model, flood risk, biodiversity conservation, recreation
    JEL: Q2 Q4 R4
    Date: 2007
  3. By: Leonardo Boncinelli
    Abstract: In this paper I provide a descriptive model of choice over time by a population of constrained maximizing agents. Agents’ choice sets are markovian in the sense that they depend on previous choices. The unperturbed dynamics turns out to be trapped into local maxima whatever the length of memory. In the presence of perturbations efficiency is got with a memory of at least two periods. This provides a useful insight for what drives to efficient evolution in this setting: perturbations create variety and a two period long memory allows comparisons and selection
    Keywords: personal experience; limited cognitive capabilities; stochastically stable distribution
    JEL: D01 D80 D81
    Date: 2007–10
  4. By: Leonardo Boncinelli
    Abstract: This papers investigates the efficiency of aggregate choice in the long run when the individual decision is driven by both personal experience and imitation. Personal experience is represented by choice sets depending upon previous choices. Imitation is modeled first through popularity weighting and then through a network of social influences. Intuition suggests imitation can work as a source of variety, spreading behaviors among which memory can make selection. However inefficiencies will persist in the stochastically stable distribution whenever the length of memory is not sufficiently long to stop inferior behaviors from moving perpetually along periodic cycles of social influences.
    Keywords: imitation; personal experience; limited cognitive capabilities
    JEL: D01 D80 D81 D85 Z13
    Date: 2007–10
  5. By: Leonardo Boncinelli
    Abstract: In this paper I apply stochastic stability to compare local information to global information in terms of welfare. Under global information agents potentially imitate anyone else, while under local information choices are grouped into information sets and agents can observe and hence imitate only those within their own information set. The welfare evaluation of information is ambiguous over finite time horizons, while in the long run less (more) information is better in the presence of pure negative (positive) spillovers. However, when a selection issue is considered a further ambiguity emerges making the comparison, in general, uncertain.
    Keywords: imitation; local information; global information; stochastic stability
    JEL: D01 D80 D81 D85 Z13
    Date: 2007–10
  6. By: Ricardo Scarpa (University of Waikato); Mara Thiene (University of Padua); Francesco Marangon (University of Udine)
    Abstract: In this paper we investigate consumer preferences for various environmentally-friendly production systems for carrots. We use discrete-choice multi-attribute stated-preference data to explore the effect of the collective reputation of growers from an Alpine valley with an established reputation for its environmentally-friendly production: Val di Gresta “the valley of organic orchards”. Data analysis of the panel of discrete responses identifies unobserved taste heterogeneity for organic, biodynamic and place of origin along with extra variance associated with experimentally designed alternatives. The assumed parametric taste distributions are each tested using the semi-nonparametric specification proposed by Fosgerau and Bierlaire (2007), while the null of normality cannot be rejected for organic and biodynamic production methods, it is rejected for the place of origin. The latter is found to be bi-modal, with modes at each side of zero. The use of a flexible taste distribution increases the plausibility of this form of heterogeneity and it appears promising for future applied studies.
    Keywords: mixed logit; flexible taste distributions; random utility parameters; collective reputation; sustainable agriculture; choice modeling; environmentally-friendly methods
    JEL: C15 C25 Q26
    Date: 2007–11–11
  7. By: Alma Berneburg (University of Applied Science Merseburg)
    Abstract: This study tries to contribute to the branch of research that is engaged in the analysis of different stimulus presentation formats and their influence on quality and validity of the test results in a Conjoint Analysis. This topic has gained special attention as new techniques became available that enable the inclusion of holographic three-dimensional stimuli in the research of consumers’ preferences. Especially for examining design-related questions this proves very interesting. The study compares the results of two Choice Based Conjoint analyses with one presenting the test object via computer-based 2D-pictures and the other using a holographic 3D-simulation. For the attributes at hand no differences between the results of the 2D- and 3D-test can be isolated on an aggregate level.
    Keywords: Stimulus presentation formats, Dimension effects, Consumer decision making, Choice experiments
    Date: 2007–10
  8. By: Seán Lyons (Economic and Social Research Institute (ESRI)); Karen Mayor (Economic and Social Research Institute (ESRI)); Richard S.J. Tol (Economic and Social Research Institute (ESRI))
    Abstract: This paper uses a McFadden choice model to measure the importance of destination, household and seasonal characteristics on the tourism destination choices of Irish households. The analysis is based on quarterly survey data of Irish households’ travel destinations between 2000 and 2006. In total, some 55 000 holiday trips were observed. Destination characteristics such as temperature, GDP and coastline are found to positively influence choice probabilities, while population density and distance have a negative effect on choice. Household specific characteristics such as the numbers of people over 60 and children in a household are found to be important. We also identify differences in preferences across seasons and a change over time of the effect of destination country GDP on Irish holiday destination choices.
    Keywords: International Tourism, Ireland, Demand Modelling
    JEL: D12 L83
    Date: 2007–09
  9. By: Frances Ruane (Economic and Social Research Institute (ESRI)); Xiaoheng Zhang (The Institute for International Integration Studies, Trinity College Dublin)
    Abstract: Differences in regulations, technical standards and national medical cultures across EU member states created a highly segmented pharmaceutical market in Europe prior to the implementation of the Single Market Programme. The subsequent reduction in non-tariff barriers to trade would be expected to have an impact on where pharmaceutical multinationals locate production within the EU. Using discrete-choice models, we study the determinants of multinationals’ location choices in terms of expanded production at existing facilities. Our results support the findings of New Economic Geography models that predict reduced rather than increased agglomeration in the face of trade-cost reductions.
    Keywords: Economic geographic, location choice, discrete choice models, European integration, FDI
    JEL: F15 F23 R12
    Date: 2007–10

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.
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