nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2010‒09‒11
three papers chosen by
Philip Yu
Hong Kong University

  1. Discrete Choice Models: The Case of Transportation in Cartagena De Indias By Daniel Toro Gonzales
  2. When Are Preferences Consistent? The Effects of Task Familiarity and Contextual Cues on Revealed and Stated Preferences By Felix Schlaepfer; Baruch Fischhoff
  3. Incentive and Information Properties of Preference Questions By Carson, Richard T; Groves, Theodore

  1. By: Daniel Toro Gonzales
    Abstract: This paper revisits the data set collected by (Toro, Alvis and Arellano 2005) in order to use it contrasting the results with some well known models in transportation. Using different discrete choice models such as probit and conditional logit, the results show that the competitive advantage of other transportation modes over bus is their lower travel time and the time waiting. Additionally, it was found that a traveler facing equal times and costs would prefer bus rather than other alternatives.
    Date: 2010–09–02
  2. By: Felix Schlaepfer (Socioeconomic Institute, University of Zurich); Baruch Fischhoff (Department of Social and Decision Sciences, Department of Engineering and Public Policy, Carnegie Mellon University)
    Abstract: Traditionally, economists make a sharp distinction between stated and revealed preferences, viewing the latter as more fully meeting the assumptions of economic analysis. Here, we consider one form of empirical evidence regarding this belief: the consistency of choices in stated and revealed preference tasks. We show that both kinds of task can produce consistent choices, suggesting that both can measure underlying preferences, if necessary conditions are met. We propose that a necessary condition is that task be either familiar to those facing it or offer contextual cues that substitute for familiarity, such as prices in competitive markets or recommendations from trusted, knowledgeable sources. We show that how well decision makers achieve such understanding is often confounded with the method that researchers use. Considering task familiarity not only clarifies some of the conflicting evidence regarding revealed and stated preference methods, but raises potentially productive questions regarding the roles of social institutions in shaping preferences.
    Keywords: Consistency, contingent valuation, framing, public goods, revealed preferences, stated preferences, validity
    JEL: D01 Q51
    Date: 2010–08
  3. By: Carson, Richard T; Groves, Theodore
    Abstract: This chapter is both a commentary on and extension of the Carson and Groves (2007) (hereafter CG) article reprinted in this volume. The substantial attention the paper has received has been enormously gratifying. Reception of CG has largely been positive with little if any substantive criticism directed toward it; and, there are many papers now being presented at conferences that are testing or relying on various aspects of it. Our remarks are organized into a series of short sections. The first points out that the main purpose of CG was to extend the revealed preference paradigm to cover some types of survey responses. The second notes that CG provides the theoretical foundation that some critics of contingent valuation (CV) had argued was missing. The third takes the concepts of “hypothetical†and “hypothetical bias†head on and argues that these concepts are, for the most part, ill-defined or simply wrong and have done enormous damage to clear and careful thinking about the nature of the response to stated preference questions. The fourth examines the properties of cheap talk which is often proposed as a way to reduced hypothetical bias. The fifth provides some elaboration on CG and the issue of how to interpret information extracted from preferences questions. The sixth poses an answer to the often asked question: Is a single binary discrete choice (SBC) question always the best elicitation format for a researcher to use? The seventh provides some elaboration on the payment card elicitation format, which in recent years has seen resurgence. The eighth turns to an examination of some of the properties of the now widely used discrete choice experiment. The ninth considers the usefulness of economic experiments to help determine the performance of preference elicitation formats. The last section addresses the relationship between CG and the behavioralist critique of neoclassical economics with a focus on the different-answers-to-the-same-underlying-question issue.
    Keywords: revealed preference paradigm
    Date: 2010–04–01

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