nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2009‒01‒03
five papers chosen by
Philip Yu
Hong Kong University

  1. Simplified Implementation of the Heckman Estimator of the Dynamic Probit Model and a Comparison with Alternative Estimators By Arulampalam, Wiji; Stewart, Mark B.
  2. Environmental diversity in recreational choice modelling By Angel Bujosa Bestard; Antoni Riera Font
  3. Comparing Willingness-to-Pay and Subjective Well-Being in the Context of Non-Market Goods By Paul Dolan; Robert Metcalfe
  4. Impact of Service Station Networks on Purchase Decisions of Alternative-fuel Vehicles By Achtnicht, Martin; Bühler, Georg; Hermeling, Claudia
  5. Network Revenue Management with Inventory-Sensitive Bid Prices and Customer Choice By Joern Meissner; Arne Strauss

  1. By: Arulampalam, Wiji (University of Warwick & IZA); Stewart, Mark B. (University of Warwick)
    Abstract: This paper presents a convenient shortcut method for implementing the Heckman estimator of the dynamic random effects probit model and other dynamic nonlinear panel data models using standard software. It then compares the estimators proposed by Heckman, Orme and Wooldridge, based on three alternative approximations, first in an empirical model for the probability of unemployment and then in a set of simulation experiments. The results indicate that none of the three estimators dominates the other two in all cases. In most cases all three estimators display satisfactory performance, except when the number of time periods is very small.
    Keywords: Dynamic discrete choice models ; initial conditions ; dynamic probit ; panel data ; dynamic nonlinear panel data models
    JEL: C23 C25 C13 C51
    Date: 2008
  2. By: Angel Bujosa Bestard (Centre de Recerca Econòmica (UIB · Sa Nostra)); Antoni Riera Font (Centre de Recerca Econòmica (UIB · Sa Nostra))
    Abstract: The accuracy of environmental valuation studies relies, to a great extent, on the suitability of the proxy measures used to capture individuals’ preferences. While important advances have been achieved in last years concerning the characterization of the physical background in which recreational choices are made, Travel Cost Method applications have failed to consider the heterogeneity of landscape and the spatial configuration of land use. This paper presents an empirical application to forest recreation in Mallorca (Spain), implementing a random parameter logit model to evaluate —in terms of goodness-of-fit, model predictions and welfare measurements— the effects of environmental diversity on the recreational site-choice process.
    Keywords: Travel Cost Method, random parameter logit, recreation demand, environmental diversity, forests
    Date: 2008
  3. By: Paul Dolan; Robert Metcalfe
    Abstract: In order to value non-market goods, economists estimate individuals' willingness to pay(WTP) for these goods using revealed or stated preference methods. We compare theseconventional approaches with subjective well-being (SWB), which is based on individuals'ratings of their happiness or life satisfaction rather than on their preferences. In the context ofa quasi- experiment in urban regeneration, we find that monetary estimates from SWB dataare significantly higher than from revealed and stated preference data. Stigma in revealedpreferences, mental accounting in stated preferences and unspecified duration in SWB ratingsmight explain some of the difference between the valuation methods.
    Keywords: willingness to pay, preferences, life satisfaction, subjective well-being, nonmarketgoods
    JEL: D61 D62 H23 Q51 C21
    Date: 2008–10
  4. By: Achtnicht, Martin; Bühler, Georg; Hermeling, Claudia
    Abstract: In this paper we analyze the impact of service station availability on the demand for alternative-fuel vehicles and the consumers’ willingness to pay for an enlarged fueling infrastructure. We examine a stated preferences choice experiment conducted as a CAPI survey with about 600 interviews of potential car buyers in Germany and estimate the coefficients of a discrete choice model. We simulate different scenarios and analyze how individual choice probabilities for alternative fuel-types are changing with a modified fueling infrastructure. In our scenarios hybrids, LPG/CNG and hydrogen will be real alternatives to the existing conventional technologies. However, biofuels and electric power trains are well behind even in a situation where their infrastructure is equally developed. Moreover, on the basis of our model we compute what increases in fixed or variable costs consumers of different income groups are willing to accept for an increasing station density.
    Keywords: Fueling Infrastructure, Alternative Fuels, Automobile Market, Stated Preferences, Discrete Choice, Network Effects
    JEL: C51 L62 R41
    Date: 2008
  5. By: Joern Meissner (Department of Management Science, Lancaster University Management School); Arne Strauss (Department of Management Science, Lancaster University Management School)
    Abstract: We develop a new approximate dynamic programming approach to network revenue management models with customer choice that approximates the value function of the Markov decision process with a concave function which is separable across resource inventory levels. This approach reflects the intuitive interpretation of diminishing marginal utility of inventory levels and allows for significantly improved accuracy compared to currently available methods. The model allows for arbitrary aggregation of inventory units and thereby reduction of computational workload, yields upper bounds on the optimal expected revenue that are provably at least as tight as those obtained from previous approaches, and is asymptotically optimal under fluid scaling. Computational experiments for the multinomial logit choice model with distinct consideration sets show that our approach results in a good trade-off between solution quality and running time for problem sizes of practical interest.
    Keywords: revenue management, dynamic programming, optimal control, applications, approximate
    JEL: C61
    Date: 2008–07

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