nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2011‒04‒02
five papers chosen by
Philip Yu
Hong Kong University

  1. Capturing Preferences Under Incomplete Scenarios Using Elicited Choice Probabilities. By Herriges, Joseph A.; Bhattacharjee, Subhra; Kling, Catherine L.
  2. Sequential Estimation of Dynamic Programming Models with Unobserved Heterogeneity By Kasahara, Hiroyuki; Shimotsu, Katsumi
  3. The Use of Hypothetical Baselines in Stated Preference Surveys By Dale Whittington; Vic Adamowicz
  5. Is China climbing up the quality ladder? Estimating cross country differences in product quality using Eurostat's COMEXT trade database By Gabor Pula; Daniel Santabárbara

  1. By: Herriges, Joseph A.; Bhattacharjee, Subhra; Kling, Catherine L.
    Abstract: Manski (1999) proposed an approach for dealing with a particular form respondent uncertainty in discrete choice settings, particularly relevant in survey based research when the uncertainty stems from the incomplete description of the choice scenarios. Specifically, he suggests eliciting choice probabilities from respondents rather than their single choice of an alternative. A recent paper in IER by Blass et al. (2010) further develops the approach and presents the first empirical application. This paper extends the literature in a number of directions, examining the linkage between elicited choice probabilities and the more common discrete choice elicitation format. We also provide the first convergent validity test of the elicited choice probability format vis-\`a-vis the standard discrete choice format in a split sample experiment. Finally, we discuss the differences between welfare measures that can be derived from elicited choice probabilities versus those that can obtained from discrete choice responses.
    Keywords: discrete choice; Elicited Choice Probabilities
    JEL: C25 Q51
    Date: 2011–03–24
  2. By: Kasahara, Hiroyuki; Shimotsu, Katsumi
    Abstract: This paper develops a new computationally attractive procedure for estimating dynamic discrete choice models that is applicable to a wide range of dynamic programming models. The proposed procedure can accommodate unobserved state variables that (i) are neither additively separable nor follow generalized extreme value distribution, (ii) are serially correlated, and (iii) affect the choice set. Our estimation algorithm sequentially updates the parameter estimate and the value function estimate. It builds upon the idea of the iterative estimation algorithm proposed by Aguirregabiria and Mira (2002, 2007) but conducts iteration using the value function mapping rather than the policy iteration mapping. Its implementation is straightforward in terms of computer programming; unlike the Hotz-Miller type estimators, there is no need to reformulate a fixed point mapping in the value function space as that in the space of probability distributions. It is also applicable to estimate models with unobserved heterogeneity. We analyze the convergence property of our sequential algorithm and derive the conditions for its convergence. We develop an approximated procedure which reduces computational cost substantially without deteriorating the convergence rate. We further extend our sequential procedure for estimating dynamic programming models with an equilibrium constraint, which include dynamic game models and dynamic macroeconomic models.
    Keywords: dynamic discrete choice, value function mapping, nested pseudo, likelihood, unobserved, heterogeneity, equilibrium constraint
    JEL: C13 C14 C63
    Date: 2011–03
  3. By: Dale Whittington (Department of Environmental Sciences & Engineering, Rosenau CB#7631, School of Public Health, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina 27599, USA, and the Manchester Business School, UK); Vic Adamowicz (Department of Rural Economy, University of Alberta, Edmonton, Canada)
    Abstract: Researchers using stated preference (SP) techniques have increasingly come to rely on what we call ?hypothetical baselines.? By the term ?hypothetical baseline,? we mean that respondents are provided with a description of a current state or baseline, but that this baseline is intentionally not the actual state of environmental quality, health or other baseline condition. Respondents are asked to disregard their existing status quo conditions for a new baseline. The SP researcher then poses a valuation question or choice task that is contingent not on the existing status quo state of the world, but rather the state of the world described in this new hypothetical baseline. In this paper we argue that SP researchers have often used hypothetical baselines without carefully considering the cognitive challenges this poses for respondents or the difficulties this practice creates for advising policy makers. We discuss the implications of hypothetical baselines on valuation and policy analysis, using arguments from the behavioral economics literature as well as from standard theory.
    Keywords: stated preference survey
    Date: 2010–09
  4. By: Concepción Román; Juan Carlos Martín; Raquel Espino; Ana Isabel Arencibia (University of Las Palmas de Gran Canaria)
    Abstract: This paper evaluates gains in efficiency produced by the use of efficient designs to analyze stated choice (SC) data. Based on a standard experiment used in a previous research, we compare the efficiency of this design with that of the efficient design obtained according to the minimization of the D-error, considering different modelling strategies. The experiment was conducted in the context of the choice between the plane and the new high speed train in the route Madrid-Barcelona. As the levels assigned to some attributes in the stated choice exercise were customized to each respondent experience, pivoting the information provided by preliminary revealed preference questions around the reference alternative (the plane, in this case), a different efficient design was created for every respondent in the sample. Results of the analysis demonstrate that substantial gains in the significance level of the parameter estimates could have been attained if the efficient design had been used to analyze SC data.
    Keywords: Stated Choice Data, Efficient Designs, Discrete Choice Models
    Date: 2011
  5. By: Gabor Pula (European Central Bank, Kaiserstraße 29, D-60311 Frankfurt am Main, Germany.); Daniel Santabárbara (Banco de España and European Central Bank, Kaiserstraße 29, 60311 Frankfurt am Main, Germany.)
    Abstract: There is an ongoing debate in the literature about the quality content of Chinese exports and to what extent China imposes a threat to the market positions of advanced economies. While China’s export structure is very similar to that of the advanced world, its export unit values are well below the level of developed economies. Building on the assumption that unit values reflect quality the prevailing view of the literature is that China exports low quality varieties of the same products than its advanced competitors. This paper challenges this view by relaxing the assumption that unit values reflect quality. We derive the quality of Chinese exports to the European Union by estimating disaggregated demand functions from a discrete choice model. The paper has two major findings. First, China’s share on the European Union market is larger than would be justified by its relatively low average prices, implying that the quality of Chinese export products is relatively high compared to many competitors. Second, China has gained quality relative to other competitors since 1995, indicating that China is climbing up the quality ladder. The relatively high and improving quality of China’s exports may be explained by the increasing role of global production networks in China. JEL Classification: F1, F12, F14, F15, F23.
    Keywords: Chinese Exports, Vertical Product Differentiation, Quality Ladder, Global Production Networks, Discrete Choice Model, COMEXT database.
    Date: 2011–03

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