nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒08‒05
eight papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. A link based network route choice model with unrestricted choice set By Fosgerau, Mogens; Frejinger, Emma; Karlstrom, Anders
  2. Fitting Complex Mixed Logit Models with Particular Focus on Labor Supply Estimation By Max Löffler
  3. Evidence-based Research in Environmental Choice Experiments By Kragt, Marit E.
  4. Inference in ordered response games with complete information By Andres Aradillas-Lopez; Adam Rosen
  5. Multinomial and Mixed Logit Modeling in the Presence of Heterogeneity: A Two-Period Comparison of Healthcare Provider Choice in Rural China By Martine Audibert; Yong He; Jacky Mathonnat
  6. Do Hypothetical Choices and Non-Choice Ratings Reveal Preferences? By B. Douglas Bernheim; Daniel Bjorkegren; Jeffrey Naecker; Antonio Rangel
  7. Integrating biophysical and economic systems in a Bayesian Network Hydro-economic framework By Kragt, Marit E.
  8. Identifying the Average Treatment Effect in a Two Threshold Model By Arthur Lewbel; Thomas Tao Yang

  1. By: Fosgerau, Mogens; Frejinger, Emma; Karlstrom, Anders
    Abstract: This paper considers the path choice problem, formulating and discussing an econometric random utility model for the choice of path in a network with no restriction on the choice set. Starting from a dynamic specification of link choices we show that it is equivalent to a static model of the multinomial logit form but with infinitely many alternatives. The model can be consistently estimated and used for prediction in a computationally efficient way. Similarly to the path size logit model, we propose an attribute called link size that corrects utilities of overlapping paths but that is link additive. The model is applied to data recording path choices in a network with more than 3,000 nodes and 7,000 links.
    Keywords: discrete choice; recursive logit; networks; route choice; infinite choice set
    JEL: C25 C5
    Date: 2013–07
  2. By: Max Löffler (IZA; University of Cologne)
    Abstract: When estimating discrete choice models, the mixed logit approach is commonly superior to simple conditional logit setups. Mixed logit models not only allow the researcher to implement difficult random components but also overcome the restrictive IIA assumption. Despite these theoretical advantages, the estimation of mixed logit models becomes cumbersome when the model's complexity increases. Applied works therefore often rely on rather simple empirical specifications as this reduces the computational burden. I introduce the user-written command lslogit which fits complex mixed logit models using maximum simulated likelihood methods. As lslogit is a d2-ML-evaluator written in Mata, the estimation is rather efficient compared to other routines. It allows the researcher to specify complicated structures of unobserved heterogeneity and to choose from a set of frequently used functional forms for the direct utility function---e.g., including Box-Cox transformations which are difficult to estimate in the context of logit models. The particular focus of lslogit is on the estimation of labor supply models in the discrete choice context and therefore it facilitates several computational exhausting but standard tasks in this research area. However, the command can be used in many other applications of mixed logit models as well.
    Date: 2013–08–01
  3. By: Kragt, Marit E.
    Abstract: Results of choice experiment studies are widely claimed to provide valuable inputs into more efficient environmental policy development. The implicit price estimates for the attributes included in the choice experiment give policy makers an indication of the non-market values of environmental goods and services. There are, however, few standardised approaches to guide the choice of the environmental attributes. Although recent publications (Boyd and Krupnick, 2009; Johnston and Russell, 2011) stress the need to base the definition of non-market environmental attributes in ecological theory, choice experiment studies often give minimal evidence to support the choice of attributes. This paper reviews ten years’ worth of choice experiment studies in leading environmental economics journals. The aim of this study is to investigate on what basis the attributes and units used in the valuation studies were chosen, and how the survey development process is reported. The review shows that only very few published papers report the evidence sources on which the choice of attributes and their levels was based. The disjoint between evidence-based research method and the reporting of protocols in choice experiment valuation studies undermines the credibility of nonmarket value estimates to people outside the profession. There is a need for greater attention to transparent, evidence-based survey development to support more robust welfare estimates and withstand criticism.
    Keywords: Attribute selection, Choice experiments, Environmental attributes, Evidence-based methods, Environmental Economics and Policy, Research Methods/ Statistical Methods, C83, Q51, Q57,
    Date: 2013–07–19
  4. By: Andres Aradillas-Lopez; Adam Rosen (Institute for Fiscal Studies and University College London)
    Abstract: We study econometric models of complete information games with ordered action spaces, such as the number of store fronts operated in a market by a firm, or the daily number of flights on a city-pair offered by an airline. The model generalises single agent models such as ordered probit and logit to a simultaneous model of ordred response. We characterise identified sets for model parameters under mild shape restrictions on agents' payoff functions. We then propose a novel inference method for a parametric version of our model based on a test statistic that embeds conditional moment inequalities implied by equilibrium behaviour. Using maximal inequalities for U-processes, we show that an asymptotically valid confidence set is attained by employing an easy to compute fixed critical value, namely the appropriate quantile of a chi-square random variable. We apply our method to study capacity decisions measured as the number of stores operated by Lowe's and Home Depot in geographic markets. We demonstrate how our confidence sets for model parameters can be used to perform inference on other quantities of economic interest, such as the probability that any given outcome is an equilibrium and the propensity with which any particular outcome is selected when it is one of multiple equilibria.
    Keywords: discrete games, ordered response, partial identification, conditional moment inequalities
    JEL: C01 C31 C35
    Date: 2013–07
  5. By: Martine Audibert (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Yong He (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Jacky Mathonnat (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This study aims at testing the theoretical issue according to which multinomial logit (MNL) would give lower performance than a mixed multinomial logit (MMNL) in the presence of heterogeneity. To do so, we construct two samples of patients surveyed within the same regions in rural China, but of an interval of 18 years, with a difference in preference heterogeneity due to income growth and population aging. With the 1989-1993 sample, both models have predicted price effects; however with the 2004-2006 sample, unlike MMNL, MNL failed to predict price effect. The explanation is that the impact of price on choice became more heterogeneous in the later than the former sample, thus heterogeneity makes a difference between MNL and MMNL. The absence of meaningful divergences of distance effects between the two models can also be explained by the evolution of heterogeneity in distance preferences over the period. The coefficients of price and distances with MMNL are higher than with MNL, indicating stronger price and distance effects in MMNL estimations. Another advantage of MMNL is the possibility to measure the extent of heterogeneity. The findings suggest caution when interpreting estimation results with MNL if heterogeneity is deemed important.
    Keywords: multinomial and mixed logit model;preference heterogeneity;healthcare choice;Chinese rural households
    Date: 2013–07–18
  6. By: B. Douglas Bernheim; Daniel Bjorkegren; Jeffrey Naecker; Antonio Rangel
    Abstract: We develop a method for determining likely responses to a change in some economic condition (e.g., a policy) for settings in which either similar changes have not been observed, or it is challenging to identify observable exogenous causes of past changes. The method involves estimating statistical relationships across decision problems between choice frequencies and variables measuring non-choice reactions, and using those relationships along with additional non-choice data to predict choice frequencies under the envisioned conditions. In an experimental setting, we demonstrate that this method yields accurate measures of behavioral responses, while more standard methods are either inapplicable or highly inaccurate.
    JEL: C91 D12 H31 Q51
    Date: 2013–07
  7. By: Kragt, Marit E.
    Abstract: Management of water resources needs to jointly consider the multiple, interdependent, uses of water. Decision support tools that aim to assist efficient integrated water resources management should integrate the environmental and socio-economic systems affected by changes in resource allocation. There exist, however, few models that assess the trade-offs between environmental and economic impacts of water management changes in an integrated framework. This paper presents a hydro-economic model that integrates hydrological and ecological systems with economic costs and nonmarket benefits in a Bayesian Network modelling framework. A suite of different modelling tools were used to assess the biophysical and economic impacts of catchment management scenarios, for a case study in Tasmania, Australia. The Bayesian Network provides a flexible modelling approach to incorporate different types of data and had the advantage of explicitly accounting for accumulated uncertainty in information.
    Keywords: Integrated Modelling, Uncertainty, Nonmarket Valuation, Choice Experiments, Integrated Water Resource Management, Hydrological Modelling, Hydro-ecological modelling, Environmental Economics and Policy, Land Economics/Use, C69, Q20, Q51, Q57,
    Date: 2013–07–19
  8. By: Arthur Lewbel (Boston College); Thomas Tao Yang (Boston College)
    Abstract: Assume individuals are treated if a latent variable, containing a continuous instrument, lies between two thresholds. We place no functional form restrictions on the latent errors. Here unconfoundedness does not hold and identification at infinity is not possible. Yet we still show nonparametric point identification of the average treatment effect. We provide an associated root-n consistent estimator. We apply our model to reinvestigate the inverted-U relationship between competition and innovation, estimating the impact of moderate competitiveness on innovation without the distributional assumptions required by previous analyses. We find no evidence of an inverted-U in US data.
    Keywords: Average treatment effect, Ordered choice model, Special regressor, Semiparametric, Competition and innovation, Identification.
    JEL: C14 C21 C26
    Date: 2013–07–01

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