nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒06‒04
four papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  2. Unveiling diffusion dynamics: an autocatalytic percolation model of environmental innovation diffusion and the optimal dynamic path of adoption subsidies By Cantono, Simona
  3. Assessing Korean Consumers’ Valuation for BSE Tested and Country of Origin Labeled Beef Products By Lee, Sang Hyeon; Lee, Ji Yong; Han, Doo Bong; Nayga, Rodolfo M. Jr
  4. An almost closed form estimator for the EGARCH model By HAFNER, Christian; LINTON, Oliver

  1. By: Bruce Meyer; Nikolas Mittag
    Abstract: We derive the asymptotic bias from misclassification of the dependent variable in binary choice models. Measurement error is necessarily non-classical in this case, which leads to bias in linear and non-linear models even if only the dependent variable is mismeasured. A Monte Carlo study and an application to food stamp receipt show that the bias formulas are useful to analyze the sensitivity of substantive conclusions, to interpret biased coefficients and imply features of the estimates that are robust to misclassification. Using administrative records linked to survey data as validation data, we examine estimators that are consistent under misclassification. They can improve estimates if their assumptions hold, but can aggravate the problem if the assumptions are invalid. The estimators differ in their robustness to such violations, which can be improved by incorporating additional information. We propose tests for the presence and nature of misclassification that can help to choose an estimator.
    Keywords: measurement error; binary choice models; program take-up; food stamps.
    JEL: C18 C81 D31 I38
    Date: 2013–05
  2. By: Cantono, Simona (University of Turin)
    Abstract: This article applies the autocatalytic percolation model developed by Cantono and Solomon (2010) to the diffusion of environmental innovation. It contributes to the recent applied microeconomic diffusion literature by unveiling diffusion dynamics, by determining under what conditions is diffusion self-sustaining and by defining the optimal dynamic schedule of adoption subsidies which insures autonomous propagation. To this end a model which combines in a unique framework a learning curve model of dynamic cost reductions, a discrete choice model of heterogeneous technology adoption and a contagion model of technology diffusion is developed. It is shown that the system dynamics are discontinuous, path-dependent and irreversible. Propagation dynamics are uncovered: diffusion occurs along subsequent conquers of islands of potential adopters. Under certain circumstances diffusion is self-sustaining. In other occasions diffusion is confined to anegligible sub-set of the entire population of potential adopters. In the latter case a policy intervention can drive the system to overall propagation. This can be achieved by adoption subsidies which, in order to be effective and to avoid a waste of resources, must follow an optimal dynamic schedule. It is shown that the phasing-out stage is as important as the early stage of the intervention.
    Date: 2012–12
  3. By: Lee, Sang Hyeon; Lee, Ji Yong; Han, Doo Bong; Nayga, Rodolfo M. Jr
    Abstract: The objective of this study is to estimate Korean consumers’ willingness to pay (WTP) for beef products with BSE testing and country of origin labeling. We use a choice experiment to examine consumers’ valuation for beef products with these labels. In addition to analysis using the pooled sample, we also conduct sub-sample analyses based on consumers’ level of risk perception about beef consumption and selected socio-demographic characteristics. Results suggest that Korean consumers value BSE tested beef. They also have a preference for domestic beef vis-à-vis imported beef. When we conducted separate analysis between respondents who have low vs high risk perception about beef consumption, results suggest that those with high risk perception tend to value BSE testing more than country of origin labeling while those with low risk perception value country of origin labeling more than BSE testing. Moreover, results from separate analysis between respondents who have higher education vs lower education and between older vs younger respondents suggest that young or high educated respondents tend to value BSE testing and imported beef from countries which have not experienced BSE outbreaks more than do older or lower educated respondents.
    Keywords: Willingness-to-Pay, BSE test label, Risk Perception, Country of Origin, Choice Experiment, Agricultural and Food Policy, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics,
    Date: 2013
  4. By: HAFNER, Christian (Université catholique de Louvain, CORE & ISBA, Belgium); LINTON, Oliver (Faculty of Economics, Cambridge University, UK)
    Abstract: The EGARCH is a popular model for discrete time volatility since it allows for asymmetric effects and naturally ensures positivity even when including exogenous variables. Estimation and inference is usually done via maximum likelihood. Although some progress has been made recently, a complete distribution theory of MLE for EGARCH models is still missing. Furthermore, the estimation procedure itself may be highly sensitive to starting values, the choice of numerical optimation algorithm, etc. We present an alter- native estimator that is available in a simple closed form and which could be used, for example, as starting values for MLE. The estimator of the dynamic parameter is inde- pendent of the innovation distribution. For the other parameters we assume that the innovation distribution belongs to the class of Generalized Error Distributions (GED), profiling out its parameter in the estimation procedure. We discuss the properties of the proposed estimator and illustrate its performance in a simulation study.
    Keywords: autocorrelations, generalized error distribution, method of moments estimator, Newton-Raphson
    JEL: C12 C13 C14
    Date: 2013–05–22

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