nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2010‒01‒16
eight papers chosen by
Philip Yu
Hong Kong University

  1. A latent class approach to investigating consumer demand for genetically modified staple food in a developing country: The case of GM bananas in Uganda By Kikulwe, Enoch; Birol, Ekin; Wesseler, Justus; Falck-Zepeda, José
  2. Choice Experiments: identifying preferences or production functions? By Fiona Gibson; Michael Burton
  3. Scale and scope effects on communities’ values for environmental improvements in the Namoi catchment: A choice modelling approach By Kasia Mazur; Jeff Bennett
  4. A Test of the Rational Expectations Hypothesis using data from a Natural Experiment By Anna Conte; Peter G. Moffatt; Fabrizio Botti; Daniela T. Di Cagno; Carlo D'Ippoliti
  5. Quantitative methods in accounting research By Marek Gruszczynski
  6. What Determines the Location Choice of Multinational Firms in the ICT Sector? By Siedschlag, Iulia; Zhang, Xiaoheng; Smith, Donal
  7. Estimating demand in search markets: the case of online hotel bookings By Sergei Koulayev
  8. Estimation of a latent class discrete choice panel data model via Maximum Likelihood and EM algorithms in Stata By Pacifico, Daniele

  1. By: Kikulwe, Enoch; Birol, Ekin; Wesseler, Justus; Falck-Zepeda, José
    Keywords: genetically modified bananas, Consumers, Choice experiment, latent class model, preference heterogeneity, Science and technology, Genetic resources, Genetically engineered crops, Genetically modified crops,
    Date: 2009
  2. By: Fiona Gibson (Faculty of Natural & Agricultural Sciences University of Western Australia); Michael Burton (Faculty of Natural & Agricultural Sciences University of Western Australia)
    Abstract: This paper presents an alternative perspective on the process by which respondents consider options within choice experiments. Building on the “new” model of consumer demand by Stigler and Becker (1977), it suggests that the attributes within choice experiments are not valued directly, but are used to generate higher level “constructs” (i.e. improvement in the environment) which are then valued. The implication is that what are currently viewed as marginal utilities of attributes are in fact marginal utilities of an environmental outcome mixed with (subjective) marginal productivity of the attribute to achieving the environmental outcome. It is suggested the Hierarchical Information Integration methods may allow one to separately identify the utility and production functions, and identify individual heterogeneity therein
    Date: 2009–11
  3. By: Kasia Mazur (Crawford School of Economics and Government, College of Asia and Pacific, Australian National University); Jeff Bennett (Crawford School of Economics and Government, College of Asia and Pacific, Australian National University)
    Abstract: This report presents results of research designed to investigate variations in willingness to pay (WTP) estimates across different scales and scopes of environmental investments. The goal is to help catchment management authorities better prioritise their natural resource management actions at both catchment and farm levels. Five split samples were used to test for scale and scope effects. A choice modelling (CM) analysis that involved the estimation of conditional logit was used to elicit household WTP for improvements in environmental quality attributes in the Namoi catchment. The approach was developed to facilitate the more accurate transfer of value estimates between different scopes of actions.
    Keywords: Choice modelling, Scale effect, Scope effect, Embedding, Non-market valuation, Catchment planning, Environment
    Date: 2009–12
  4. By: Anna Conte (Strategic Interaction Group, Max-Planck Institute of Economics, Jena); Peter G. Moffatt (School of Economics, University of East Anglia); Fabrizio Botti (University of Rome I "La Sapienza"); Daniela T. Di Cagno (LUISS Guido Carli); Carlo D'Ippoliti (University of Rome "La Sapienza")
    Abstract: Data on contestants' choices in Italian Game Show Affari Tuoi are analysed in a way that separates the effect of risk attitude (preferences) from that of beliefs concerning the amount of money that will be offered to contestants in future rounds. The most important issue addressed in the paper is what belief function is actually being used by contestants. The parameters of this function are estimated freely along with the parameters of a choice model. Separate identification of the belief function and preferences is possible by virtue of the fact that at a certain stage of the game, beliefs are not relevant, and risk attitude is the sole determinant of choice. The rational expectations hypothesis is tested by comparing the estimated belief function with the "true" offer function which is estimated using data on offers actually made to contestants. We find that there is a significant difference between these two functions, and hence we reject the rational expectations hypothesis. However, when a simpler "rule-of-thumb" structure is as- sumed for the belief function, we find a correspondence to the function obtained from data on actual offers. Our overall conclusion is that contestants are rational to the extent that they make use of all available relevant information, but are not fully rational because they are not processing the information in an optimal way. The importance of belief-formation is confirmed by the estimation of a mixture model which establishes that the vast majority of contestants are forward-looking as opposed to myopic.
    Keywords: Beliefs, Discrete choice models, Method of simulated likelihood, Natural Experiments, rational expectations, risky choice
    JEL: C15 C23 C25 D81
    Date: 2009–12–21
  5. By: Marek Gruszczynski (Warsaw School of Economics)
    Abstract: Quantitative methods are in frequent use in modern accounting research. The evidence may be found e.g. in the journals like “Journal of Accounting Research”, “European Accounting Review”, “Review of Quantitative Finance and Accounting” or in the Accounting Research Network in SSRN base. Paper presents a brief survey of research areas and statistical-econometric approaches in accounting research. Particular reference goes to research on corporate disclosure. Methodological component of the paper includes remarks on the use of binary response models with choice-based and matched samples as well as comments on the sample selection approaches.
    Keywords: accounting research, corporate disclosure, binary response, choice-based samples, matched samples, sample selection
    JEL: M41 C31 C35
    Date: 2009–12–30
  6. By: Siedschlag, Iulia; Zhang, Xiaoheng; Smith, Donal
    Abstract: We analyse the location decisions of 8,468 foreign affiliates in the Information and Communication Technologies (ICT) sector established in 224 regions in the European Union over the period 1998-2008. Our results suggest that on average, the location probability of foreign affiliates in ICT manufacturing and services increases with market size, market potential, the presence of other foreign-owned firms in the ICT sector, human capital, income tax, and decreases with the corporation tax rate. In addition, in the case of foreign affiliates in ICT services, the innovation intensity in the ICT sector has a positive effect on the location probability. We find that relevant geographical structures for the location decision are different for multinationals with a parent firm in the European Union and the United States.
    Keywords: Conditional logit/European Union/Foreign direct investment/Information and Communication Technologies/Location choice/Nested logit
    Date: 2009–12
  7. By: Sergei Koulayev
    Abstract: In this paper, we emphasize that choice sets generated by a search process have two properties: first, they are limited; second, they are endogenous to preferences. Both factors lead to biased estimates in a static demand framework that takes choice sets as given. To correct for this bias, we estimate a structural model of search for differentiated products, using a unique dataset of consumer online search for hotels. Within a nested logit utility model, we show that the mean utility function and the search cost distribution of a representative consumer are non-parametrically identified, given our data. Using our model's estimates, we quantify both sources of bias: they lead to overestimation of price elasticity by a factor of five and four, respectively. The median search cost is about 38 dollars per 15 hotels; we also present some evidence on multi-modality of search cost distribution.
    Keywords: Consumer behavior ; Consumers' preferences ; Electronic commerce
    Date: 2009
  8. By: Pacifico, Daniele
    Abstract: This pdf contains a do file that shows how to estimate a latent class discrete choice panel data model in Stata via Maximum Likelihood and an EM algorithm.
    Keywords: Stata; code; routine; EM algorithm; latent class models;
    JEL: C13 C14 C23 C25 C01
    Date: 2009–11–20

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