nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2009‒08‒22
three papers chosen by
Philip Yu
Hong Kong University

  1. Identification of structural dynamic discrete choice models By Le-Yu Chen
  2. How to understand our willingness-to-pay to fight climate change? A choice experiment approach By Clément De Chaisemartin; Thuriane Mahé
  3. Nonparametric Identification of Multinomial Choice Demand Models with Heterogeneous Consumers By Steven T. Berry; Philip A. Haile

  1. By: Le-Yu Chen (Institute for Fiscal Studies and Academia Sinica)
    Abstract: <p><p>This paper presents new identification results for the class of structural dynamic discrete choice models that are built upon the framework of the structural discrete Markov decision processes proposed by Rust (1994). We demonstrate how to semiparametrically identify the deep structural parameters of interest in the case where utility function of one choice in the model is parametric but the distribution of unobserved heterogeneities is nonparametric. The proposed identification method does not rely on the availability of terminal period data and hence can be applied to infinite horizon structural dynamic models. For identification we assume availability of a continuous observed state variable that satisfies certain exclusion restrictions. If such excluded variable is accessible, we show that the structural dynamic discrete choice model is semiparametrically identified using the control function approach.</p> </p><p><p>This is a substantial revision of "Semiparametric identification of structural dynamic optimal stopping time models", CWP06/07.</p></p>
    Date: 2009–05
  2. By: Clément De Chaisemartin (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X); Thuriane Mahé (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: We explore the willingness-to-pay (WTP) to fight climate change in a choice experiment. Since tree planting prevents climate change, subjects are offered to choose between receiving a high amount of money or receiving a lower amount of money plus participating to tree planting action. This allows us to get an individual interval of the WTP to prevent climate change. We also set the experiment to control for framing effects: we measure whether subjects WTP is higher not to prevent a tree planting action (negative framing) than to contribute to it (positive framing). Finally, we measure subjects' individual characteristics like altruism and risk aversion with a questionnaire, to understand the determinants of WTP. The results show that the WTP to prevent climate change is high: subjects are ready to give up half their gains to participate to a tree planting action. Women tend to have a higher WTP. We also find that both altruistic and self-interested motives can explain WTP. Surprisingly, their degree of knowledge of climate change related issues do not influence subjects WTP. Finally, when the choice is negatively phrased, WTP increases: subjects are ready to pay more not to make the number of trees planted decrease than to increase it. This suggests that negative eco-labelling might have a greater impact on consumer preferences than positive labels.
    Keywords: willingness-to-pay, preferences elicitation, carbon-offset schemes, framing effect, climate change.
    Date: 2009–03–25
  3. By: Steven T. Berry; Philip A. Haile
    Abstract: We consider identification of nonparametric random utility models of multinomial choice using "micro data," i.e., observation of the characteristics and choices of individual consumers. Our model of preferences nests random coefficients discrete choice models widely used in practice with parametric functional form and distributional assumptions. However, the model is nonparametric and distribution free. It allows choice-specific unobservables, endogenous choice characteristics, unknown heteroskedasticity, and high-dimensional correlated taste shocks. Under standard "large support" and instrumental variables assumptions, we show identifiability of the random utility model. We demonstrate robustness of these results to relaxation of the large support condition and show that when it is replaced with a weaker "common choice probability" condition, the demand structure is still identified. We show that key maintained hypotheses are testable.
    JEL: C35
    Date: 2009–08

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