nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2009‒09‒19
eight papers chosen by
Philip Yu
Hong Kong University

  1. How to Extend a Model of Probabilistic Choice from Binary Choices to Choices among More Than Two Alternatives By Pavlo R. Blavatskyy
  2. Comparing Open-Ended Choice Experiments and Experimental Auctions: An Application to Golden Rice By Jay R. Corrigan; Dinah Pura T. Depositario; Rodolfo M. Nayga, Jr.; Ximing Wu; Tiffany P. Laude
  3. A Pharmaceutical Innovation – Is it Worth the Money? Whose Money? By Michele Sennhauser; Peter Zweifel
  4. Measuring the Willingness to Pay for Fresh Water Cave Diving By William L. Huth; O. Ashton Morgan
  5. Determinants and dynamics of current account reversals: an empirical analysis By Liesenfeld, Roman; Moura, Guilherme V.; Richard, Jean-François
  6. Innovation behaviour at farm level: Selection and identification By Sauer, Johannes; Zilbermann, David
  7. Consumer acceptance of genetically modified rapeseed-oil: A discrete-choice-experiment By Klein, Agnes; Zapilko, Marina; Menrad, Klaus; Gabriel, Andreas
  8. Health Insurance and Productivity: Evidence from the Manufacturing Sector By Sang Nguyen; Alice Zawacki

  1. By: Pavlo R. Blavatskyy
    Abstract: This note presents an algorithm that extends a binary choice model to choice among multiple alternatives. Both neoclassical microeconomic theory and Luce choice model are consistent with the proposed algorithm. The algorithm is compatible with several empirical findings (asymmetric dominance and attraction effects) that cannot be explained within standard models.
    Keywords: Probabilistic choice, binary choice, multiple alternatives
    JEL: C44 D11 D70 D81
    Date: 2009–09
  2. By: Jay R. Corrigan; Dinah Pura T. Depositario; Rodolfo M. Nayga, Jr.; Ximing Wu; Tiffany P. Laude
    Abstract: We use two different experimental valuation methods to estimate consumer demand for genetically-modified golden rice. The first is an open-ended choice experiment (OECE) where participants name the quantities of golden rice and conventional rice demanded at each of several price combinations, one of which will be randomly chosen as binding. This allows us to estimate market demand by aggregating demand across participants. This estimate of market demand also allows us to estimate own-price elasticity and consumer surplus for golden rice. Comparing willingness-to-pay (WTP) estimates from the OECE with those from a uniform-price auction, we find that OECE WTP estimates exhibit less affiliation across rounds, and the effects of positive and negative information under the OECE are more consistent with prior expectations and existing studies. We also find that while auction WTP estimates more than double across five rounds, OECE WTP estimates are stable across rounds and are always roughly equal to those from the final auction round.
    Keywords: choice experiments, experimental auctions, golden rice, valuation
    Date: 2009–08
  3. By: Michele Sennhauser (Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich)
    Abstract: This study seeks to provide evidence for deciding whether or not a pharmaceutical innovation should be included in the benefit list of social health insurance. A discrete choice experiment (DCE) was conducted in Germany to measure preferences for modern insulin therapy. Of the 1,100 individuals interviewed in 2007, 200 suffered from type 1 diabetes, 150 from insulin-treated type 2 diabetes, and 150 from insulin-naive type 2 diabetes. The long-acting insulin analogue ”Insulin Detemir” is compared to human insulin as the status quo. The DCE contains two price attributes, copayment and increased contributions to health insurance. As one would expect, non-affected non-diabetics and insulin-naive diabetics exhibit higher willingness-to-pay (WTP) values through copayment (adjusted for probability of contracting diabetes), while affected type 1 and insulin-treated type 2 diabetics have higher WTP through increased contributions. However, WTP values exceed the extra treatment cost in both financing alternatives, justifying inclusion of the innovation in the benefit list from a cost-benefit point of view.
    Keywords: Health insurance, discrete-choice experiment, preferences, diabetes
    JEL: I11 H51 I18
    Date: 2009–09
  4. By: William L. Huth; O. Ashton Morgan
    Abstract: Fresh water springs are unique natural resources that are contained within public lands across the United States. Natural resource management on public lands generates many interesting policy issues as the competing goals of conservation, recreational opportunity provision, and revenue generation often clash. As demand for recreational cave diving sites increases, the paper provides natural resource site managers with the first statistical estimate of divers’ willingness to pay to dive fresh water cave and cavern systems. Using a contingent valuation model approach and correcting for hypothetical bias, we find that divers’ median willingness to pay for cave diving opportunities at the site of interest is approximately $68 per dive. Model results also provide evidence of diver sensitivity with respect to scope as individuals are willing to pay more for dives that are higher in quality. Key Words: Contingent Valuation Model; Willingness to Pay; Cave Diving; Scope Sensitivity
    JEL: Q26 Q51
    Date: 2009
  5. By: Liesenfeld, Roman; Moura, Guilherme V.; Richard, Jean-François
    Abstract: We use panel probit models with unobserved heterogeneity, state-dependence and serially correlated errors in order to analyze the determinants and the dynamics of current-account reversals for a panel of developing and emerging countries. The likelihood-based inference of these models requires high-dimensional integration for which we use Efficient Importance Sampling (EIS). Our results suggest that current account balance, terms of trades, foreign reserves and concessional debt are important determinants of current-account reversal. Furthermore, we find strong evidence for serial dependence in the occurrence of reversals. While the likelihood criterion suggest that state-dependence and serially correlated errors are essentially observationally equivalent, measures of predictive performance provide support for the hypothesis that the serial dependence is mainly due to serially correlated country-specific shocks related to local political or macroeconomic events.
    Keywords: Panel data,dynamic discrete choice,importance sampling,Monte Carlo integration,state dependence,spillover effects
    JEL: C15 C23 C25 F32
    Date: 2009
  6. By: Sauer, Johannes; Zilbermann, David
    Abstract: Using a squential logit model and a mixed-effects logistic regression approach this empirical study investigates factors for the adoption of automatic milking technology (AMS) at the farm level accounting for problems of sequential sample selection and behaviour identification. The results suggest the importance of the farmerâs risk perception, significant effects of peer-group behaviour, and a positive impact of previous innovation experiences.
    Keywords: squential logit model, automatic milking technology (AMS), Livestock Production/Industries, Research Methods/ Statistical Methods, Risk and Uncertainty,
    Date: 2009–10
  7. By: Klein, Agnes; Zapilko, Marina; Menrad, Klaus; Gabriel, Andreas
    Abstract: This paper deals with consumer acceptance of genetically modified rapeseed-oil in Germany and analyzes under which conditions consumers would buy such products. To investigate this subject a Discrete-Choice-Experiment was performed within the framework of a cross-European consumer survey in spring 2007. The results show that consumersâ utility is increased by an organically produced product and decreased by a GM product. Thereby the association with individual advantages (health benefits) decreases consumersâ utility less compared to the association with environmental benefits. Additionally, it could be shown that German consumers prefer locally produced rapeseed-oil compared to imported. If GM products exhibit a considerable price discount compared to conventional products, a certain market potential for GM rapeseed-oil exists in Germany. But the granting of discounts must be carefully balanced especially against the background of profitability for producers and processors.
    Keywords: Consumer behavior, GM food, rapeseed-oil, Discrete-Choice-Experiment, Food Consumption/Nutrition/Food Safety,
    Date: 2009–10
  8. By: Sang Nguyen; Alice Zawacki
    Abstract: This paper examines the relationship between employer-sponsored offers of health insurance and establishments’ labor productivity. Our empirical work is based on unique plant level data that links the 1997 and 2002 Medical Expenditure Panel Survey-Insurance Component with the 1992, 1997, and 2002 Census of Manufactures. These linked data provide information on employer-provided insurance and productivity. We find that health insurance offers are positively associated with levels of establishments’ labor productivity. These findings hold for all manufacturers as well as those with fewer than 100 employees. Our preliminary results also show a drop in health care costs from the 75th to the 25th percentile would increase the probability of a plant offering insurance by 1.5-2.0 percent in both 1997 and 2002. The results from this paper provide encouraging and new empirical evidence on the benefits employers may reap by offering health insurance to workers.
    Keywords: Employer-provided health insurance, labor productivity, manufacturing industries
    Date: 2009–09

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