nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒10‒25
four papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. Demand for primary health care in rural noth India: jointly modelling revealed preference and qualitative choice intentions By Richard A Iles
  2. Competing for contracts with buyer uncertainty: Choosing price and quality variables By Anderson, Edward; Qian, Cheng
  3. A bootstrap test for instrument validity in heterogeneous treatment effect models By Toru Kitagawa
  4. Validation of structural labor supply model by the elasticity of taxable income By Thor O. Thoresen; Trine E. Vattø

  1. By: Richard A Iles
    Keywords: Consumer demand, revealed performance, stated choice, healthcare, India, data enrichment
    JEL: C51 D12 I15
    Date: 2013–06
  2. By: Anderson, Edward; Qian, Cheng
    Abstract: We model a situation in which a single firm evaluates competing suppliers and selects just one. Suppliers submit bids involving both price and quality variables. The buyer makes a choice which from the supplier's perspective appears to contain a stochastic element - for example the buyer may have information, which is not shared with the suppliers, and that gives one supplier an advantage in the final choice. We use a discrete choice model of buyer choice (e.g. multinomial logit). Our main result is that the supplier's choice of the quality variables is not affected by the competitive environment. Thus the suppliers compete only on price. We compare this with a second model in which the buyer's weighting on different quality variables is uncertain at the time bids are made.
    Keywords: Supplier choice, Quality variables, Nash equilibrium, Types of uncerta inty
    Date: 2013–05–09
  3. By: Toru Kitagawa (Institute for Fiscal Studies and University College London)
    Abstract: This paper develops a specification test for the instrument validity conditions in the heterogeneous treatment effect model with a binary treatment and a discrete instrument. A necessary testable implication for the joint restriction of instrument exogeneity and instrument monotonicity is given by nonnegativity of point-identifiable complier's outcome densities. Our specification test infers this testable implication using a Kolmogorov-Smirnov type test statistic. We provide a bootstrap algorithm to implement the proposed test and show its asymptotic validity. The proposed test procedure can apply to both discrete and continuous outcome cases.
    Date: 2013–10
  4. By: Thor O. Thoresen; Trine E. Vattø (Statistics Norway)
    Abstract: Given that structural labor supply models continue to play a key role in the process of policy design, it is important to validate their capacity to provide reasonable predictions of alternative hypothetical policy options. Comparing outcomes before and after a realized policy change (such as a tax reform) provides a source of information about behavioral response that can be used to certify the structural labor supply model. The elasticity of taxable income (ETI) measures the response in taxable income to a change in the net-of-tax rate and is a key concept in the quasi-experimental approach. The present paper shows how the ETI methodology can be used to validate predictions from a discrete choice structural labor supply model. Practical guidance is given on how such comparisons can be carried out, and results of these two main methods of obtaining empirical response estimates are contrasted and interpreted.
    Keywords: Model validation; Response to tax change; Discrete choice structural labor supply model; Elasticity of taxable income
    JEL: H21 H24 H31 J22

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