nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2008‒11‒18
sixteen papers chosen by
Philip Yu
Hong Kong University

  1. Construction of time preference: an investigation of the role of elicitation method in experimental elicitation of time preference. By Oksana Tokarchuk
  2. A computational voting model By Luigi Maregno; Corrado Pasquali
  3. Applying Geographically Weighted Regression to Conjoint Analysis: Empirical Findings from Urban Park Amenities By Tanaka, Katsuya; Yoshida, Kentaro; Kawase, Yasushi
  4. Korean Consumers€٠Preferences and Willingness to Pay for Domestic versus U.S. and Australian Beef with Alternative Attributes By Umberger, Wendy J.; Calkins, Chris R.
  5. Delving into Choice Internals: A Joint Discrete Choice/Attribute Rating Model By Gubanova, Tatiana; Volinskiy, Dmitriy; Adamowicz, Wiktor; Veeman, Michele
  6. Determinants of Agricultural Landowners€٠Willingness to Supply Open Space Through Conservation Easements By Miller, Ashley D.; Bastian, Christopher T.; McLeod, Donald M.; Keske, Catherine M.; Hoag, Dana L.
  7. External Validity of Hypothetical Surveys and Laboratory Experiments By Chang, Jae Bong; Lusk, Jayson L.; Norwood, F. Bailey
  8. Modeling Yeah- and Nay-Saying to Alternatives in Conjoint Experiments By Hu, Wuyang
  9. Consumer Responses to New Food Quality Information: Are Some Consumers More Sensitive than Others By Gao, Zhifeng; Schroeder, Ted
  10. Modelling acreage decisions within the multinomial logit framework : profit functions and discrete choice models By Carpentier, Alain; Letort, Elodie
  11. Consumer preferences for extra virgin olive oil with country-of-origin and geographical indication labels in Canada By Menapace, Luisa; Colson, Greg; Grebitus, Carola; Facendola, Maria
  12. Willingness to Pay for Beef Quality Attributes: Combining Mixed Logit and Latent Segmentation Approach By Chung, Chanjin; Briggeman, Brian; Han, Sungill
  14. Assessing the marginal dollar value losses to an estuarine ecosystem from an aggressive alien invasive crab By Bell, Brian; Menzies, Sharon; Yap, Michael; Kerr, Geoff
  15. Analysing options for the Red Gum Forests along the Murray River By Bennett, Jeff; Dumsday, Rob; Gillespie, Rob
  16. Dynamic Contingent Valuation and Choice Modelling for Ecosystem Services By Hertzler, Greg

  1. By: Oksana Tokarchuk (DISA, Faculty of Economics, Trento University)
    Abstract: The idea of preference reversal and construction of preference is not new to literature in decision making. Indeed, several theories have been developed to explain it. (Lichtenstein and Slovic, 2006). The present paper considers heuristics activated in different elicitation procedures applied in time preference research. I show that activation of these rules in correspondence with different elicitation methods leads to observation of a particular pattern most frequently reported in time preference literature: hyperbolic discounting. In particular, I analyze two most diffused elicitation procedures, matching task and two variations of choice task in multiple price list format (MPL). In a series of experiments I demonstrate that matching task is characterized by choice of focal amounts and anchoring to previously reported amount. At the same time, choice in MPL format largely depends on the structure of the list from which the choice is made. I study two widely used structures of MPL choice task format: (a) MPL with nominal structure (Green et al, 1997), where choice alternatives correspond to the same nominal amounts that are available at different time horizons; (b) MPL with interest rate structure (Coller and Williams, 1999), in which monetary alternatives at each time horizon in consideration are constructed as increases corresponding to a fixed interest rate. Although these two elicitation structures activate similar decision processes they lead to observation of qualitatively different results that are in large part defined by the underlying structure of the list of alternatives. I show that matching task and MPL with nominal structure lead to observation of hyperbolic evidence, that could be of different kinds depending on the structure of MPL table. At the same time, elicitation with MPL with interest rate structure leads to observation of rather stable time preference that can be well approximated by exponential discounting.
    Date: 2008–11
  2. By: Luigi Maregno; Corrado Pasquali
    Abstract: Social choice models usually assume that choice is among exogenously given and non decomposable alternatives. Often, on the contrary, choice is among objects that are constructed by individuals or institutions as complex bundles made of many interdependent components. In this paper we present a model of object construction in majority voting and show that, in general, by appropriate changes of such bundles, different social outcomes may be obtained, depending upon initial conditions and agenda, intransitive cycles and median voter dominance may be made appear or disappear, and that, finally, decidability may be ensured by increasing manipulability or viceversa.
    Keywords: Social choice; object construction power; agenda power; intran- sitive cycles; median voter theorem.
    JEL: D71 D72
    Date: 2008–11–11
  3. By: Tanaka, Katsuya; Yoshida, Kentaro; Kawase, Yasushi
    Abstract: The objective of this study is to develop spatially-explicit choice model and investigate its validity and applicability in CA studies. This objective is achieved by applying locally-regressed geographically weighted regression (GWR) and GIS to survey data on hypothetical dogrun facilities (off-leash dog area) in urban recreational parks in Tokyo, Japan. Our results show that spatially-explicit conditional logit model developed in this study outperforms traditional model in terms of data fit and prediction accuracy. Our results also show that marginal willingness-to-pay for various attributes of dogrun facilities has significant spatial variation. Analytical procedure developed in this study can reveal spatially-varying individual preferences on attributes of urban park amenities, and facilitates area-specific decision makings in urban park planning.
    Keywords: Choice experiments, conjoint analysis, dogrun, geographically weighted regression, spatial econometrics, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2008
  4. By: Umberger, Wendy J.; Calkins, Chris R.
    Abstract: In 2007, consumer focus groups and online surveys using choice sets were conducted to examine South Korean€ٳ perceptions of and willingness-to-pay for Australian, U.S. and domestic beef. Consumers indicated higher positive perceptions of Australian beef than of U.S. beef, particularly in the area of environmentally friendly, cleanliness, standards and credibility; and thus Korean consumers discount Australian beef less than U.S. beef relative to domestic beef. The U.S. industry could improve perceptions and their country-image by providing Korean consumers with promotional material pointing out that U.S. beef production systems are comparable to competitors€٠in terms of €ܥnvironmental-friendliness€ݠand other quality attributes.
    Keywords: Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,
    Date: 2008
  5. By: Gubanova, Tatiana; Volinskiy, Dmitriy; Adamowicz, Wiktor; Veeman, Michele
    Abstract: Multi-attribute modeling has rapidly progressed from being a novelty to becoming a widely used tool of economic research. When both choice and attribute ratings data are available, a model that makes joint use of both offers informative inference opportunities. In the present study we develop a joint model which utilizes both choice and ratings data, allows for scale usage heterogeneity, is robust to violations of utility continuity and completeness. The model is used to obtain WTP estimates for genetically-modified content and country-of-origin attributes in an survey-based study of Canola oil labeling. The median survey respondent's WTP for non-GM Canola oil was found to be CA$0.92/liter. The median WTP for non-specification of GM content was found to be approximately 80% of the WTP for the explicitly non-GM-labeled product. The median WTP to purchase Canada-made Canola oil versus a U.S. product was estimated to be CA$0.86/liter.
    Keywords: Demand and Price Analysis, Institutional and Behavioral Economics,
    Date: 2008
  6. By: Miller, Ashley D.; Bastian, Christopher T.; McLeod, Donald M.; Keske, Catherine M.; Hoag, Dana L.
    Abstract: Open space provides a range of benefits to many people of a community, beyond the benefits that accrue to private landowners. Parks and natural areas can be used for recreation; wetlands and forests supply storm-water drainage and wildlife habitat; farms and forests provide aesthetic benefits to surrounding residents. Moreover, undeveloped land can give relief from congestion. Agricultural lands are an important source of open space, but many of these lands are under great development pressure. One tool that is currently being used to aid in the preservation of open space by landowners is conservation easements. The rate of land protection by state and local land trusts has tripled since the beginning of the decade, and the West is the fastest growing region for both the number of acres under conservation easements and number of land trusts according to the Land Trust Alliance. Given the increased demand for amenities provided by private agricultural lands and the increased use of conservation easements, it is interesting to note that there is a paucity of research related to landowners€٠preferences regarding conservation easements. The specific research objective of this paper is to determine important factors affecting an agricultural landowners€٠potential choice regarding the placement of a parcel of land under a conservation easement. Knowing these factors could be useful to communities, public organizations and land trusts trying to provide open space to meet a growing demand for this public good. Information to construct a survey was obtained through a series of focus groups held in Wyoming and Colorado. Results from these focus groups were then used to develop twelve versions of a stated choice survey instrument. The first part of the survey included questions about the landowner€ٳ specific community. These Likert scale questions were to designed to elicit a measurement of the respondents€٠€ܳense of place€ݠregarding his or her community. The second part of the survey questioned participants about their land and their land€ٳ attributes, including what the landowner felt his land was worth, types of production and non-production activities land was used for, the types of developmental pressures being felt by the landowner, and the kinds of amenities he would like to conserve on his property. The third section of the survey included questions about the landowner€ٳ personal knowledge of easements and two stated choice questions regarding conservation easements. These stated choice questions focused on five attributes: contract length, managerial control, wildlife habitat, access and payment. The final section of the survey asked respondents about demographic characteristics. Data were analyzed as a multinomial logit random utility model in LIMDEP. Respondents preferred an easement that was in perpetuity over an easement that was term in length. Respondents were less likely to accept an easement if public access on their property was required. As payment proportion in relation to the respondents€٠perception of the value of their land went up, so did the likelihood that they would accept the easement. Landowners in Colorado were more likely to accept an easement than landowners in Wyoming. This is somewhat expected as developmental pressures in Colorado are higher than Wyoming, and thus far more easements have been transacted in Colorado than in Wyoming. Years on the land and connection to community were significant in explaining the acceptance of an easement scenario. The more connected one was to their community, the more likely they were to accept an easement. The longer a respondent had lived on their land, the more likely they were to accept an easement as well. The level of education a respondent had achieved negatively impacted easement acceptance. If an easement was already in place on a respondents€٠property, the likelihood of accepting an easement scenario increased significantly.
    Keywords: Land Economics/Use,
    Date: 2008
  7. By: Chang, Jae Bong; Lusk, Jayson L.; Norwood, F. Bailey
    Abstract: We compare the ability of three preference elicitation methods (hypothetical choices, non-hypothetical choices, and non-hypothetical rankings) and three discrete-choice econometric models (the multinomial logit, the independent availability logit, and the random parameter logit) to predict actual retail shopping behavior in three different product categories (ground beef, wheat flour, and dishwashing liquid). Overall, across all methods, we find a reasonably high level of external validity. Our results suggest that the non-hypothetical elicitation approaches, especially the non-hypothetical ranking, outperformed the hypothetical choice experiment in predicting retail sales. We also find that the random parameter logit can have superior predictive performance, but that the multinomial logit predicts equally well in some circumstances.
    Keywords: contingent valuation, choice experiments, experimental economics, external validity, field experiment, Agribusiness, Consumer/Household Economics, Marketing, Research Methods/ Statistical Methods,
    Date: 2008
  8. By: Hu, Wuyang
    Abstract: Using a series of hurdle choice models, this study considers both nay-saying and yeah-saying to alternatives offered in a conjoint experiment. These behaviors are characterized by respondents persistently choosing the no-choice alternative or choosing at least one of the non-empty options offered in a survey. Results show that jointly consider nay-saying and yeah-saying in a two-hurdle model drastically improves model fit; welfare implications based on hurdle models are also different from those based on models without hurdle specification.
    Keywords: conjoint experiment, hurdle choice model, yeah and nay-saying, Research Methods/ Statistical Methods, D12, C25,
    Date: 2008
  9. By: Gao, Zhifeng; Schroeder, Ted
    Abstract: In the main approaches used to elicit consumer preference for food attributes, only limited attribute information are present. Though useful for ranking and revealing consumer preferences, these methods are not appropriate when results may be dependent upon the information set presented in the surveys. Studies have found out that additional quality information in surveys significantly affected respondents€٠attitudes to or WTP for a specific product attributes. By using cluster analysis we are able to classify respondents into different consumer groups and investigate the difference in responses to new attribute information across consumer groups. Results show that different types of consumer€ٳ WTP for beef steak attributes varies significantly and their responses to new attribute information are different, if a specific attribute is studied. Over all, there was no significant difference between the responses to new information between consumer groups. However, in the case where cue attributes existed, consumers with small family size, less children, lower income, are single and younger, respond significantly intensive to the new information than other consumers.
    Keywords: Food Attribute, Willingness-to-Pay, Choice Experiment, Cluster Analysis, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,
    Date: 2008
  10. By: Carpentier, Alain; Letort, Elodie
    Abstract: The first purpose of this paper is to propose theoretical justifications for using Logit acreage share models. Two approaches are presented: the Logit shares can be derived from a well defined profit function or derived as the result of a set of discrete choices. It is next shown that both theoretical frameworks allow to define generalizations of the standard Logit shares. These generalizations build on developments of the Multinomial Logit framework for modelling discrete choices and seek to define models that are flexible and empirically tractable. Two applications are presented to illustrate the empirical interest of the proposed models. Both use a rotating panel of French farms (1987-2006) and consider the estimation of yield functions, variable input demand functions and acreage share functions.
    Keywords: Crop Production/Industries, Farm Management,
    Date: 2008
  11. By: Menapace, Luisa; Colson, Greg; Grebitus, Carola; Facendola, Maria
    Abstract: This paper investigates the impact of geographical origin labels on consumers' preferences. Specifically, we consider the preferences of Canadian consumers for extra virgin olive oils marketed with country-of-origin labels (COOL) and geographical indications (GIs). In contrast to previous studies, by considering a third-country market (a market different from that where production occurs), we can look simultaneously at COOL and GIs and separate the impacts of these two forms of geographical origin labels. We find that, within the context of a high quality value-added commodity such as extra virgin olive oil, consumers value both COOL and GI labels. But, in terms of the fraction of consumers with positive preferences and willingness to pay, COOL labels are valued more by Canadian consumers compared to GI labels. To better account for taste heterogeneity among consumers, we partition the sample on the basis of consumers' choice of shopping location. We find that different consumer groups vary to a large degree in their relative valuations for COOL, GI, and organic olive oils.
    Keywords: country of origin labeling, extra-virgin olive oil, geographical indications of origin, mixed logit, PDO/PGI, stated-choice experiments, Consumer/Household Economics, Demand and Price Analysis,
    Date: 2008
  12. By: Chung, Chanjin; Briggeman, Brian; Han, Sungill
    Abstract: This study develops an alternative way of identifying the heterogeneity of WTP estimates for product attributes. The alternative approach combines mixed logit models with a latent segmentation method (MLS). First, the combined MLS approach estimates a mixed logit model and retrieve individual specific parameter estimates based on individual specific posterior distribution derived from the individual sequence of observed choices in the conjoint experiments. Second, WTPs of each choice variables are computed for each individual using the marginal rate of substitution between economic and choice variables. Finally, latent segmentation is conducted based on WTPs, individual perceptions on quality attributes, and demographic characteristics, and WTPs are compared among segments. The MLS approach is applied for estimating willingness to pay for beef quality attributes and country-of-origin in the Korea market. The MLS approach allows us to identify various clusters based on people€ٳ preferences and demographics, and provide estimates of willingness to pay for beef quality attributes and country-of-origin for these clusters.
    Keywords: Farm Management,
    Date: 2008
  13. By: Ubilava, David; Foster, Kenneth A.; Lusk, Jayson L.; Nilsson, Tomas
    Abstract: Consumers' preferences for credence attributes of a product may differ from each other, when facing the choices between branded and/or non-branded products. We test this hypothesis with conditional and mixed logit regression using data obtained by choice experiment surveys. The results suggest that, on average, consumers are willing to pay more for a certification attribute when the product is branded. Additionally, greater variation in consumer willingness-to-pay is observed in the non-branded case. This latter characteristic of the results may represent the increased uncertainty some consumers internalize concerning quality consistency when brand information is not provided. These results have interesting implications for producers, processors, retailers, and policy makers.
    Keywords: Consumer/Household Economics,
    Date: 2008
  14. By: Bell, Brian; Menzies, Sharon; Yap, Michael; Kerr, Geoff
    Abstract: This paper reports on a case study to establish dollar values for loss of biodiversity in the New Zealand coastal marine environment. The study uses the European Shore Crab (Carcinas maenas) as the example alien invasive species and the Pauatahanui Inlet, Wellington, New Zealand, as the ecosystem representative of the coastal marine environment. Choice modelling is the stated preference tool used to elicit marginal dollar values for these various attributes of the inlet. Reallocation of existing government expenditure is used as the payment mechanism. Results indicate a wide range of dollar values for the marginal losses to the environment, with no clear trend on a distance-decay relationship. The probability distributions of the dollar values of the environmental attributes tended to have a concentration around the median with very wide tails, especially on the high side. This indicates that most people generally agreed on a dollar value, but a very few individuals expressed extremely high values. The study concludes that the dollar values for loss of biodiversity and other environmental attributes do provide useful information to decision makers, but considerable caution needs to be exercised when applying these values in benefit cost studies. Marginal rate of substitution estimates between environmental attributes will be useful for estimating money values for attributes identified given future work estimates a statistically significant money value for one.
    Keywords: choice modelling, tax reallocation, biosecurity, coastal marine, Environmental Economics and Policy, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,
    Date: 2008
  15. By: Bennett, Jeff; Dumsday, Rob; Gillespie, Rob
    Abstract: The Victorian Environmental Assessment Council is conducting an investigation into the management of the public land River Red Gum Forests of the Murray River Valley in Victoria. In this paper the authors apply the results of an earlier Choice Modelling exercise commissioned by VEAC to estimate the non-use values of the forests. A Benefit Cost Analysis of VEAC's draft recommendations included assessment of the market and non market values associated with different River Red Gum forest management strategies. It is concluded that the use of water for environmental flows is competitive with its use for irrigation. Other economic values associated with timber harvesting, grazing and duck hunting are small in comparison with the water values.
    Keywords: Choice Modelling, Environment, River Red Gums, Benefit Cost Analysis, Water Resources, Land Economics/Use, Resource /Energy Economics and Policy,
    Date: 2008
  16. By: Hertzler, Greg
    Abstract: Non market valuation and bio economic modelling are combined in a dynamic model of ecosystem services. A mathematical proof demonstrates that the imputed price of natural capital contains all non market values and that scarcity rent is the total value of ecosystem services. A dynamic demand system, including characteristics is derived. New methods are developed for dynamic welfare analysis and both revealed and stated preference methods are proposed for estimating the price of natural capital. Estimation is simple if we avoid surveying consumers who degrade the ecosystem and instead consult owners who accrue the scarcity rent and conserve for the future.
    Keywords: Non market valuation, ecosystem services, Lancaster demand, welfare analysis, analytical solutions, Demand and Price Analysis, Environmental Economics and Policy, Research Methods/ Statistical Methods, Q57, Q51, Q56,
    Date: 2008

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