nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2011‒07‒27
four papers chosen by
Philip Yu
Hong Kong University

  1. A Dynamic Model of Demand for Houses and Neighborhoods By Patrick Bayer; Robert McMillan; Alvin Murphy; Christopher Timmins
  2. Time Inconsistency, Expectations and Technology Adoption: The Case of Insecticide Treated Nets By Alessandro Tarozzi; Aprajit Mahajan
  3. Production versus Distribution-oriented FDI By Jörn Kleinert; Farid Toubal
  4. The management of Natura 2000 Network sites: a discrete choice experiment approach. By David Hoyos; Petr Mariel; Eneko Garmendia

  1. By: Patrick Bayer; Robert McMillan; Alvin Murphy; Christopher Timmins
    Abstract: We develop a tractable model of neighborhood choice in a dynamic setting along with a computationally straightforward estimation approach. This approach uses information about neighborhood choices and the timing of moves to recover moving costs and preferences for dynamically-evolving housing and neighborhood attributes. The model and estimator are potentially applicable to the study of a wide range of dynamic phenomena in housing markets and cities. We focus here on estimating the marginal willingness to pay for non-marketed amenities – neighborhood racial composition, air pollution, and violent crime – using rich dynamic data. Consistent with the time-series properties of each amenity, we find that a static demand model understates willingness to pay to avoid pollution and crime but overstates willingness to pay to live near neighbors of one’s own race. These findings have important implications for the class of static housing demand models typically used to value urban amenities.
    Keywords: Neighborhood Choice, Housing Demand, Hedonic Valuation, Dynamic Discrete Choice
    Date: 2011
  2. By: Alessandro Tarozzi; Aprajit Mahajan
    Abstract: Economists have recently argued that time inconsistency may play a central role in explaining inter-temporal behavior, particularly among poor households. However, time-preference parameters are typically not identified in standard dynamic choice models and little is known about the fraction of inconsistent agents in the population. We formulate a dynamic discrete choice model in an unobservedly heterogeneous population of possibly time-inconsistent agents motivated by specifically collected information combined with a field intervention in rural India. We identify and estimate all time-preference parameters as well as the population fractions of time-consistent and "naive" and "sophisticated" time-inconsistent agents. We estimate that time-inconsistent agents account for more than half of the population and that "sophisticated" inconsistent agents are considerably more present-biased than their "naive" counterparts. We also examine whether there are other differences across types (e.g. in risk and cost preferences) and find that these differences are small relative to the differences in time preferences.
    Keywords: Malaria, Expectations, Bednets, Identication, Dynamic Programming, Discrete Choice, Time Inconsistency
    JEL: I1 I3
    Date: 2011
  3. By: Jörn Kleinert (University of Tübingen - Univeristy of Tübingen); Farid Toubal (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The business literature has long recognized the importance of multinationals' distribution networks. The empirical analysis of distribution-oriented FDI has, however, received little attention which is at least partly due to the lack of appropriate data. We present a slightly modified version of Helpman, Melitz, and Yeaple (2004) that explicitly models the possibility for a multinational firm to export through its wholesale trade affiliate. We analyze the multinational firms' choice between foreign production and foreign distribution. Our empirical analysis uses different discrete choice models and alternative specifications for several sub-samples of multinational firms. We consider complex foreign sales strategies and correct for the sample selection bias that arises because we only observe firms that have foreign affiliates. Our results show that the decision between distribution and production-oriented FDI is based on the trade-off between fixed and variable costs
    Keywords: Multinational firms, Wholesale sales, Discrete choice
    Date: 2010–10–31
  4. By: David Hoyos (Universidad del País Vasco (UPV/EHU)); Petr Mariel (Universidad del País Vasco (UPV/EHU)); Eneko Garmendia (Universidad del País Vasco (UPV/EHU))
    Abstract: One of the main problems that public institutions face in the management of protected areas, such as the European Natura 2000 network, is how to design and implement sustainable management plans accounting both for the social cost and benefits of conserving these sites. This paper provides with an empirical application of a discrete choice experiment undertaken in a Natura 2000 site in the Basque Country (Spain) aimed at evaluating the social preferences for different land-use options. This information is then used to evaluate the social desirability of some future management plans.
    Keywords: discrete choice experiments; choice modelling; environmental valuation; Natura 2000
    JEL: Q51
    Date: 2011–07–14

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