nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2012‒06‒25
fifteen papers chosen by
Philip Yu
Hong Kong University

  1. A tractable consideration set structure for network revenue management By Arne Strauss; Kalyan Talluri
  2. Child Care Assistance: Are Subsidies or Tax Credits Better? By Gong, Xiaodong; Breunig, Robert
  3. Estimating the Supply of Forest Carbon Offsets: A Comparison of Best- Worst and Discrete Choice Valuation Methods By Soto, José R.; Adams, Damian C.
  4. Using the logit model with aggregated choice data in estimation of Iowa corn farmers’ conservation tillage subsidies By Wade, Tara; Kurkalova, Lyubov; Secchi, Silvia
  5. Willingness-To-Pay for Functional Dairy Products and the Influence of Starting Point Bias: Empirical Evidence for Germany By Bechtolda, Kai-Brit; Abdulai, Awudu
  6. The Paradox of Choice: Why More is Good & Too Much is Terrible By Lewis, Daniel; Allender, William J.; Richards, Timothy J.; Hamilton, Stephen F.; Park, Sungho
  7. Are Results from Non-Hypothetical Choice-Based Conjoint Analysis and Non-Hypothetical Recoded-Ranking Conjoint Analysis Similar? By Akaichi, Faical; Nayga, Rodolfo M., Jr.; Gil, José M.
  8. Stated Preference and Perception Analysis for Traceable and BSE-tested Beef: An Application of Mixed Error-Component Logit Model By Lim, Kar Ho; Hu, Wuyang; Maynard, Leigh J.; Goddard, Ellen W.
  9. Labeled Versus Unlabeled Choice Experiments for Valuing Great Lakes Beach Characteristics By Weicksel, Scott; Lupi, Frank; Kaplowitz, Michael; Chen, Min
  10. Elicit the Values of On- and Off-margin Consumers: Combining Choice Rankings and Auctions By Palma, Marco A.; Zhang, Yu Yvette
  11. Social Networks and New Product Choice By Richards, Timothy J.; Allender, William J.; Hamilton, Stephen F.
  13. Conservation values and management preferences for the Ningaloo Marine Park: a discrete choice experiment By Rogers, Abbie A.
  14. “Mixed signals: Stated preferences for future states of three New Zealand rivers” By Bell, B.; Sinner, J.; Phillips, Y.; Yap, M.; Scarpa, R.; Batstone, C.; Marsh, D.
  15. Consumers’ willingness-to-pay for low-calorie labeled Rice By Iwamoto, Hiroyuki

  1. By: Arne Strauss; Kalyan Talluri
    Abstract: The dynamic program for choice network RM is intractable and approximated by a deterministic linear program called the CDLP. When the segment consideration sets overlap, the CDLP is difficult to solve. A weaker formulation (SDCP+) is tractable and approximates the CDLP value very closely. We show that if the segment consideration sets follow a tree structure, the two problems are equivalent, and give a counterexample to show that cycles can induce a gap between CDLP and the relaxation.
    Keywords: discrete-choice models, network revenue management, consideration sets
    JEL: C61 L93 L83 M11
    Date: 2012–02
  2. By: Gong, Xiaodong (NATSEM, University of Canberra); Breunig, Robert (Australian National University)
    Abstract: We evaluate price subsidies and tax credits for child care. We focus on partnered women's labor supply, household income and welfare, demand for formal and informal child care and government expenditure. Using Australian data, we estimate a joint, discrete structural model of labor supply and child care demand. We introduce two methodological innovations: a quantity constraint that total formal and informal child care hours is at least as large as the mother's labor supply and child care explicitly included in the utility function as a proxy for child development. We find that tax credits are better than subsidies in terms of increasing average hours worked and household income. However, tax credits disproportionately benefit wealthier and more educated women. Price subsidies, while less efficient, have positive re-distributional effects.
    Keywords: child care, labor supply, elasticities, discrete choice model
    JEL: C15 C35 J22
    Date: 2012–05
  3. By: Soto, José R.; Adams, Damian C.
    Abstract: The use of carbon markets to regulate greenhouse gasses has been promoted as a cost-effective tool to deal with global warming. These markets often encourage forest landowners to capture carbon in exchange for compensation, by using different platforms that vary in terms of contract length, penalties for withdrawal, etc. These differences in available carbon programs send signals to both consumers, and potential producers of carbon credits, which often cause confusion, price variations, and potential barriers to participation. This study uses one of the most comprehensive lists of Florida non-industrial private forest landowners to implement two different conjoint choice tasks (best worst choice and discrete choice experimentation), which offer multiple options to estimate attitudes of landowners towards different carbon programs, as well as various avenues to estimate willingness to accept. Results indicate that landowners would need between $20 to $30 acre-per-year to be positively affected by revenue, while the inclusion of penalty for early withdrawal increases cost of participation by approximately $4.45 to $10.41 acre-per-year. In addition, this study compares the performance of best worst choice with the traditional discrete choice experimentation method, and finds similar estimates of willingness to accept from both models, but disagreement with overall attribute impact estimates.
    Keywords: Best-Worst Choice, Best-Worst Scaling, Discrete-Choice Experimentation, Willingness-to-Accept, Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2012
  4. By: Wade, Tara; Kurkalova, Lyubov; Secchi, Silvia
    Abstract: This study estimates the costs of adoption of conservation tillage by Iowa corn farmers by utilizing the method of empirical estimation of a logit model that incorporates the full information on the attributes of agents and county aggregated measures of agents’ choices. The methodology treats the aggregated data as an expected value—the area-weighted group average of individual probabilities of choosing conservation tillage—subject to a measurement error. Using the 2002 and 2004 county-average conservation tillage choice data, we estimate field level costs of the adoption of conservation tillage and predict that the sample average subsidy payment required to entice farmers to use conservation tillage is $17.65/acre. The results indicate that conservation tillage adoption is significantly affected by soil characteristics, crop choice and high net returns using conventional tillage methods.
    Keywords: aggregated data, conservation tillage, estimated subsidies, logit model, Crop Production/Industries, Research Methods/ Statistical Methods, Q12, Q1, Q, C35, C3, C,
    Date: 2012
  5. By: Bechtolda, Kai-Brit; Abdulai, Awudu
    Abstract: This study employs stated preference data from a choice experiment to address two issues related to consumer demand for functional dairy products: (1) Consumers’ preferences for functional dairy product attributes in Germany, and (2) are willingness-to-pay estimates obtained in the choice experiment affected by starting point bias? Based on a random parameter logit model, our results indicate that dairy products enriched with omega-3 fatty acids and bearing a health claim that is aimed at healthy blood vessels and healthy metabolism are highly valued. Furthermore, results reveal that willingness-to-pay is indeed susceptible to starting point bias. In a two-split sample approach, we find that varying the price levels displayed in the first choice set significantly affects respondents’ willingness-to-pay for functional dairy products.
    Keywords: Functional food attributes, choice experiments, preference heterogeneity, willingness-to-pay, starting point bias, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, C25, D12,
    Date: 2012
  6. By: Lewis, Daniel; Allender, William J.; Richards, Timothy J.; Hamilton, Stephen F.; Park, Sungho
    Abstract: Please contact William Allender ( for a copy of the manuscript that goes with this poster.
    Keywords: Consumer Search, Product Variety, Discrete Choice Models, Preference for Variety., Consumer/Household Economics, Demand and Price Analysis, Marketing,
    Date: 2012–06–01
  7. By: Akaichi, Faical; Nayga, Rodolfo M., Jr.; Gil, José M.
    Keywords: Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Marketing,
    Date: 2012
  8. By: Lim, Kar Ho; Hu, Wuyang; Maynard, Leigh J.; Goddard, Ellen W.
    Abstract: Recent studies shows that marketing potential for BSE-tested and traceable beef might exist (Abidoye, et al. 2011, Bailey, et al. 2005, Dickinson and Bailey 2002, Dickinson and Bailey 2005, Loureiro and Umberger 2007). Although consumers’ willingness to pay for is a necessary condition for adoption of an attributes, agribusiness and policy makers can benefit from understanding why consumers are willing to pay for such attribute. We conducted a choice experiment to elicit consumer willingness to pay (WTP) for BSE-tested and traceable beef. We adopted the perceived risk framework suggested by Pennings et al 2002 to explore the relation between consumer perceived risk and WTP for these food-safety attributes. Our results revealed that risk perception, risk attitude, BSE-concern, and perceived level of control agribusiness has on food safety significantly influenced WTP for traceable and BSE-tested beef
    Keywords: Food Safety Attributes, Choice Experiment, Risk Perception, Risk Attitude, Choice Experiment, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Livestock Production/Industries, Risk and Uncertainty,
    Date: 2012
  9. By: Weicksel, Scott; Lupi, Frank; Kaplowitz, Michael; Chen, Min
    Keywords: Research Methods/ Statistical Methods,
    Date: 2012
  10. By: Palma, Marco A.; Zhang, Yu Yvette
    Abstract: Auctions are commonly used when a seller is unsure about the values that potential buyers attach to the object being sold. Bidders’ willingness to pay can be elicited in the form of bids. Many auctions are designed to be truth revealing such that bidders’ optimal strategy is to bid their true value. However, people sometimes do not bid sincerely; in particular off-margin bidders, whose values are far below or above the market-clearing price, are often observed not to bid sincerely (Shorgen et al. 2001). Low-value bidders might believe they will never win, while high-value bidders might believe they will never lose. Therefore, off-margin bidders often do not reveal their true values (Miller and Plott, 1985; Franciosi et al. 1993). For example, Knetsch et al. (2001) found that a second-price auction might not engage low-value bidders, whereas a ninth-price auction might not engage high value bidders. This paper presents a combined choice ranking and 11th-price sealed-bid auction mechanism which reveals the values of both on- and off- margin consumers for seven fruit products. Unlike experimental auctions that use lab-induced values to generate on- and off-margin bidders, the choice rankings reveal bidders’ preference and signal their relative positions on the value distributions. We found that low-value bidders tend not to bid attentively while high-value bidders place bids strongly agreeing with their rankings of the products. Our approach provides an effective mechanism to discriminate sincere bidders from casual bidders and improves the reliability of the elicitation of consumer valuations.
    Keywords: Experiments, 11th-price sealed-bid auction, choice rankings, consumer valuations, fruit products, novel products., Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, Research Methods/ Statistical Methods, C91, D03, D44,
    Date: 2012–08–14
  11. By: Richards, Timothy J.; Allender, William J.; Hamilton, Stephen F.
    Abstract: Inuential individuals in a social network environment are important in shaping preferences for new products. In this study, we adopt an incentive compatible choice-based conjoint analysis approach to generate data on the introduction of a new ice cream product. We use spatial econometric methods to determine how individuals are likely to change their preferences when exposed to the choices of other members in their social network. We …nd evidence that agents look to others for guidance in their preference for subjective or taste-speci…c parameters, but rely on own preferences for objectively measured attributes such as price. We also use spatial methods to determine which network-member is the most inuential. We …nd that the most connected member is not necessarily the most inuential, and that inuence can be determined econometrically.
    Keywords: choice-based conjoint, experimental economics, new product introduction, social network analysis, spatial econometrics, Marketing, Production Economics, Public Economics, Research Methods/ Statistical Methods,
    Date: 2012–06–03
  12. By: Chalak, Ali; Abiad, Mohamad
    Keywords: Food Consumption/Nutrition/Food Safety,
    Date: 2012
  13. By: Rogers, Abbie A.
    Abstract: The creation of a marine reserve network is an active area of policy in Australia. Successful policy hinges on community support, which requires an understanding of what drives improvements in social welfare. Here, a discrete choice experiment is used to estimate ecological values for the Ningaloo Marine Park. A novel aspect of this research is that it not only considers the values people hold for conservation outcomes, but also their preferences for how those outcomes are achieved. By considering management process within the choice model, we gain a richer understanding of the relationship between social welfare and marine conservation. The results indicate that management process does have an impact on individuals’ preferences for conservation.
    Keywords: Discrete choice experiment, management preferences, Ningaloo Marine Park, Teaching/Communication/Extension/Profession,
    Date: 2012–02
  14. By: Bell, B.; Sinner, J.; Phillips, Y.; Yap, M.; Scarpa, R.; Batstone, C.; Marsh, D.
    Abstract: We conducted an online choice survey to inform advice to the Tasman District Council on setting management objectives for multiple uses and values across several catchments. One sub-sample was recruited via a survey company and a second via a public call with prize draw. From a survey with unlabelled choice sets for three rivers, we estimated a separate model for each river. Coefficients for natural character, fish & fishing, local jobs and cost were generally significant and had expected signs. Coefficients on swimming and boating attributes were weak even though 68% and 31%, respectively, of the panel sample reported engaging in these activities. Levels of attributes varied for the three rivers and, together with within-sample variation, made cross-river comparisons challenging. Latent class analysis was used to assess non-attendance with interesting results. The panel and public sample results highlighted the effect of random versus non-random sampling.
    Keywords: Resource /Energy Economics and Policy,
    Date: 2012–02
  15. By: Iwamoto, Hiroyuki
    Abstract: The purpose of this study is to examine the importance of low calorie content in Japanese consumers’ rice purchasing decisions. The Choice Modeling (Random Parameter Logit Model) is used in order to quantify the welfare change associated with the change in the level of low calorie content, local origin label, price attribute for the sample of Japanese consumers in March 2009. The consumer has a positive perception of local origin and rice cultivar label. Average evaluation of the low calorie content attribute is negative (-116 yen/5kg). But, half of samples have positive perception of low calorie content. Their willingness to pay for low-calorie content attribute range from 800-900 yen/5kg.The results suggests that latent demand for low calorie labelled rice exists on a limited scale.
    Keywords: Choice Experiment, Quality of Life (QOL), Wellness Market, Consumer/Household Economics,
    Date: 2012–02

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