nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2010‒08‒14
five papers chosen by
Philip Yu
Hong Kong University

  1. Choice probability generating functions By Fosgerau, Mogens; McFadden, Daniel; Bierlaire, Michel
  2. Estimating nonparametric mixed logit models via EM algorithm By Daniele Pacifico
  3. On the role of unobserved preference heterogeneity in discrete choice models of labour supply By Daniele Pacifico
  4. Structural modeling of altruistic giving By Breitmoser, Yves
  5. Household Demand for Broadband Internet Service By Rosston, Gregory L.; Savage, Scott J.; Waldman, Donald M.

  1. By: Fosgerau, Mogens; McFadden, Daniel; Bierlaire, Michel
    Abstract: This paper establishes that every random utility discrete choice model (RUM) has a representation that can be characterized by a choice-probability generating function (CPGF) with specific properties, and that every function with these specific properties is consistent with a RUM. The choice probabilities from the RUM are obtained from the gradient of the CPGF. Mixtures of RUM are characterized by logarithmic mixtures of their associated CPGF. The paper relates CPGF to multivariate extreme value distributions, and reviews and extends methods for constructing generating functions for applications. The choice probabilities of any ARUM may be approximated by a cross-nested logit model. The results for ARUM are extended to competing risk survival models.
    Keywords: Discrete choice; random utility; mixture models; duration models; logit; generalised extreme value; multivariate extreme value
    JEL: C14 C35
    Date: 2010
  2. By: Daniele Pacifico
    Abstract: The aim of this paper is to describe a Stata routine for the nonparametric estimation of mixed logit models using a Expectation-Maximisation algorithm. We also compare the performance of our estimator with respect to more typical parametric mixed logit models estimated by means of Simulated Maximum Likelihood.
    Keywords: EM algorithm; latent class; mixed logit model; unobserved heterogeneity
    Date: 2010–05
  3. By: Daniele Pacifico
    Abstract: The aim of this paper is to analyse the role of unobserved preference heterogeneity in structural discrete choice models of labour supply. Within this framework, unobserved heterogeneity has been estimated either parametrically or semiparametrically through random coefficient models. Nevertheless, the estimation of such models by means of standard, gradient-based methods is often difficult, in particular if the number of random parameters is high. For this reason, the role of unobserved taste variability in empirical studies is often constrained since only a small set of coefficients is assumed to be random. However, this simplification may affect the estimated labour supply elasticities and the subsequent policy recommendations. In this paper, we propose a new estimation method based on an EM algorithm that allows us to fully consider the effect of unobserved heterogeneity nonparametrically. Results show that labour supply elasticities and other post-estimation results change significantly only when unobserved heterogeneity is considered in a more flexible and comprehensive manner. Moreover, we analyse the behavioural effects of the introduction of a working-tax credit scheme in the Italian tax-benefit system and show that the magnitude of labour supply reactions and the post-reform income distribution can differ significantly depending on the specification of unobserved heterogeneity.
    Keywords: behavioural microsimulation; labour supply; unobserved heterogeneity; random coefficient mixed models; EM algorithm
    JEL: J22 H31 H24 C25 C14
    Date: 2010–05
  4. By: Breitmoser, Yves
    Abstract: The paper analyzes econometric models of altruistic giving in dictator and public goods games. Using existing data sets, I evaluate internal and external validity of "atheoretic" regression models as well as structural models of random behavior, random coefficients, and random utility, controlling for subject heterogeneity by finite mixture modeling. In dictator games, atheoretic regression lacks external validity, while random coefficient models and random utility models offer high degrees of both internal and external validity. In public goods games, regression works comparably well, being bettered only by random utility models. Overall, the ordered GEV model of random utility is most appropriate to describe choices in the considered games.
    Keywords: structural modeling; altruism; dictator game; public goods; ordered choice sets
    JEL: C50 C44 D64 C72
    Date: 2010–08–05
  5. By: Rosston, Gregory L.; Savage, Scott J.; Waldman, Donald M.
    Abstract: As part of the Federal Communications Commission (“FCC”) National Broadband Report to Congress, we have been asked to conduct a survey to help determine consumer valuations of different aspects of broadband Internet service. This report details our methodology, sample and preliminary results. We do not provide policy recommendations.<br><br>This draft report uses data obtained from a nationwide survey during late December 2009 and early January 2010 to estimate household demand for broadband Internet service. The report combines household data, obtained from choices in a real market and an experimental setting, with a discrete-choice model to estimate the marginal willingness-to-pay (WTP) for improvements in eight Internet service characteristics.
    Keywords: Technology and Industry
    Date: 2010–02

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