nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2010‒05‒29
four papers chosen by
Philip Yu
Hong Kong University

  1. Learn Without Counterfactuals By Friederike Mengel; Javier Rivas
  2. The effect of rating scale format on response styles: the number of response categories and response category labels By Weijters, B.; Cabooter, E.; Schillewaert, N.
  3. IV models of ordered choice. By Chesher, A.; Smolinski, K.
  4. Demand for Crop Insurance by Organic Corn and Soybean Farmers in Three Major Producing States By Singerman, Ariel; Hart, Chad E.; Lence, Sergio H.

  1. By: Friederike Mengel; Javier Rivas
    Abstract: In this paper we study learning procedures when counterfactuals (payo s of not-chosen actions) are not observed. The decision maker reasons in two steps: First, she updates her propensities for each action after every payo experience, where propensity is de ned as how much she prefers each action. Then, she transforms these propensities into choice probabilities. We introduce natural axioms in the way propensities are updated and the way propensities are translated into choice, and study the decision marker's behavior when such axioms are in place.
    Keywords: Adaptive Learning; Counterfactuals; Partial Information; Reinforcement Learning
    JEL: D83
    Date: 2010–02
  2. By: Weijters, B.; Cabooter, E.; Schillewaert, N. (Vlerick Leuven Gent Management School)
    Abstract: Questionnaires using Likert-type rating scales are an important source of data in marketing research. Researchers use different rating scale formats with varying numbers of response categories and varying label formats (e.g., 7-point rating scales labeled at the endpoints, fully labeled 5-point scales, etc.) but have few guidelines when selecting a specific format. Drawing from the literature on response styles, we formulate hypotheses on the effect of the labeling of response categories and the number of response categories on the net acquiescence response style, extreme response style and misresponse to reversed items. We test the hypotheses in an online survey (N=1207) with eight experimental conditions and a follow-up study with two experimental conditions (N = 226). We find evidence of strong effects of scale format on response distributions and misresponse to reversed items, and we formulate recommendations on the choice of a scale format.
    Keywords: Rating scale format, Response styles, Number of response categories, Response category labels
    Date: 2010–05–19
  3. By: Chesher, A.; Smolinski, K.
    Abstract: This paper studies single equation instrumental variable models of ordered choice in which explanatory variables may be endogenous. The models are weakly restrictive, leaving unspecified the mechanism that generates endogenous variables. These incomplete models are set, not point, identifying for parametrically (e.g. ordered probit) or nonparametrically specified structural functions. The paper gives results on the properties of the identified set for the case in which potentially endogenous explanatory variables are discrete. The results are used as the basis for calculations showing the rate of shrinkage of identified sets as the number of classes in which the outcome is categorised increases.
    Date: 2009–12–06
  4. By: Singerman, Ariel; Hart, Chad E.; Lence, Sergio H.
    Abstract:  Abstract A survey of organic grain and oilseed producers in Iowa, Minnesota and Wisconsin was conducted to collect information about their demographic characteristics, production and price risk management strategies, yields and losses, and crop insurance decisions. The data are analyzed using a discrete choice model to establish which variables influence organic producers’ decision of whether to purchase crop insurance and also which ones affect the insurance product choice when applicable. The study describes the risk profiles of organic producers, and analyzes whether significant variations exist between organic and conventional methods of production so as to quantitatively determine the differential production risk associated with organic production. This research may contribute to the design of an organic crop insurance policy in which organic producers would be charged according to their idiosyncratic production risks, rather than the arbitrary 5% blanket premium surcharge currently in use.  
    Date: 2010–05–23

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