nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2010‒01‒10
five papers chosen by
Philip Yu
Hong Kong University

  1. Confidence in preferences By Hill, Brian
  2. Choice Experiment Study on the Wilingness to Py to Improve Electricity Services By Abdullah, Sabah; Mariel, P
  3. Model for Studying Commodity Bundling with a Focus on Consumer Preference By Yuri Park; Hyunnam Kim; Jongsu Lee
  4. A forecast simulation analysis of the next-generation DVD market based on consumer preference data By Jongsu Lee; Jae Young Choi; Youngsang Cho
  5. Consumer Preferences for Automobile Energy Efficiency Grades By Chang Seob Kim; Yoonmo Koo; Ie-jung Choi; Junhee Hong; Jongsu Lee

  1. By: Hill, Brian
    Abstract: Indeterminate preferences have long been a tricky subject for choice theory. One reason for which preferences may be less than fully determinate is the lack of confidence in one’s preferences. In this paper, a representation of confidence in preferences is proposed. It is used to develop an account of the role which confidence which rests on the following intuition: the more important the decision to be taken, the more confidence is required in the preferences needed to take it. An axiomatisation of this choice rule is proposed. This theory provides a natural account of when an agent should defer a decision; namely, when the importance of the decision exceeds his confidence in the relevant preferences. Possible applications of the notion of confidence in preferences to social choice are briefly explored.
    Keywords: Incomplete preference; Revealed preference; Confidence in preferences; Deferral of decisions; Importance of decisions; Social choice
    JEL: D01 D71
    Date: 2009–10–01
  2. By: Abdullah, Sabah; Mariel, P
    Abstract: Modern forms of energy are an important vehicle towards poverty alleviation in rural areas of developing countries. Most developing countries’ households heavily rely on wood fuel which impact their health and social–economic status. To ease such a dependency, other modern forms of energy, namely electricity, need to be provided. However, the quality of the electricity service, namely reliability, is an important factor in reducing this dependency. This paper discusses a choice experiment valuation study conducted among electrified rural households located in Kisumu, Kenya, in which the willingness to pay (WTP) to avoid power outages or blackouts was estimated. A mixed logit estimation was applied to identify the various socio-economic and demographic characteristics which determine preferences to reduce power outages among a household’s users. In conclusion, several of the socio-economic and demographic characteristics outlined in this paper were identified and can assist service differentiation to accommodate the diverse households’ preferences towards the improvement of the electricity service.
    Keywords: developing country; rural; power outages; willingness to pay; random parameter logit
    Date: 2009
  3. By: Yuri Park; Hyunnam Kim; Jongsu Lee (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)
    Abstract: As various mobile contents can be delivered over mobile platform, mobile contents have been considered as new profit opportunities, Choices of mobile contents and mobile terminals are not independent but closely related. Accordingly, this paper analyses consumer preferences and correlations between the adoption of mobile phones and mobile contents. Based on survey data, multinomial logit and multivariate probit models with a Bayesian approach are used for understanding structures of consumer preferences. The results show not only consumer preferences for specific features of mobile phones and complementary relations between various types of mobile contents but also significant correlations between the adoption of phones and of contents. The results identify necessities of releasing phones with full web browsers in specific forms as well as providing product and services with an integrated view for both mobile phones and mobile contents. Also, the study presents information and new business opportunities for the telecommunication market.
    Keywords: mobile phone, mobile contents, consumer preferences, discrete choice model, bayesian approach
    JEL: C11 C42 D12 M21 O33
    Date: 2009–11
  4. By: Jongsu Lee; Jae Young Choi; Youngsang Cho (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)
    Abstract: Just as standards wars over formats had characterized VCRs upon introduction to the market, the next-generation DVD standards war between Blu-Ray and HD-DVD lasted six years before Blu-Ray won the contest. Beginning with stated preference data drawn from a structured conjoint survey conducted before Blu-Ray became the de facto standard of the next-generation DVD format, we estimated consumer preferences on digital video players. A Bayesian mixed-logit model was used and market share simulations were conducted under various scenarios based on estimated parameters to surmise the future South Korean digital video-player market. Results indicate that consumers feel that network size and title availability are more important than hardware-related facets of the product, such as definition and storage capacity. The level of title availability and price of the Blu-Ray player for Blu-Ray¡¯s dominance over DVD will vary by the penetration rate of DVD players.
    Keywords: next-generation DVD, de facto standard, mixed logit, market share simulation, standard competitiongrade, willingness to pay, relative importance
    JEL: C11 C25 C63 L15 L82
    Date: 2009–11
  5. By: Chang Seob Kim; Yoonmo Koo; Ie-jung Choi; Junhee Hong; Jongsu Lee (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)
    Abstract: Recently, increases in energy prices have made energy conservation and efficiency improvements even more essential than in the past. With the rising cost of oil, specifically, energy efficiency has become one of the principal factors relevant to the choice of an automobile. However, due to the difficulty experienced by general consumers in obtaining reliable information regarding energy efficiency, in many countries around the world energy efficiency label regulations have been implemented which enforce a system of energy efficiency grade labeling. In this study, consumer preferences regarding energy efficiency grade were analyzed by estimating the marginal willingness to pay and the relative importance of energy efficiency grade using several discrete choice methods, including the multinomial logit, mixed logit, and mixed multiple discrete-continuous extreme value models.
    Keywords: multinomial logit, mixed logit, multiple discrete-continuous extreme value, energy efficiency grade, willingness to pay, relative importance
    JEL: C13 H21 H23 O33 O53
    Date: 2009–11

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