nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2013‒11‒02
eight papers chosen by
Edoardo Marcucci
Universita' di Roma Tre

  1. Understanding the Consumption Behaviors on Electric Vehicles in China - A Stated Preference Analysis By Libo Wu; Changhe Li; Haoqi Qian; ZhongXiang Zhang
  2. Semi-Parametric Inference in Dynamic Binary Choice Models By Andriy Norets; Xun Tang
  3. Steady-State Labor Supply Elasticities: A Survey By Bargain, Olivier; Peichl, Andreas
  4. Nonparametric Welfare Analysis in Stochastic Models of Binary Choice By Debopam Bhattacharya
  5. Imperfect Attention and Menu Evaluation By Paola Manzini; Marco Mariotti
  6. Why Do Shoppers Use Cash? Evidence from Shopping Diary Data By Wakamori, Naoki; Welte, Angelika
  7. Are Gibbs-type priors the most natural generalization of the Dirichlet process? By Pierpaolo De Blasi; Stefano Favaro; Antonio Lijoi; Ramsés H. Mena; Igor Prünster; Mattteo Ruggiero
  8. Household Behavior and the Marriage Market By Del Boca, Daniela; Flinn, Christopher

  1. By: Libo Wu (School of Economics, Fudan University, Center for Energy Economics and Strategy Studies, Fudan University, Fudan-Tyndall Center, China); Changhe Li (School of Economics, Fudan University, China); Haoqi Qian (School of Economics, Fudan University, Center for Energy Economics and Strategy Studies, Fudan University, China); ZhongXiang Zhang (School of Economics, Fudan University, Center for Energy Economics and Strategy Studies, Fudan University, China)
    Abstract: This paper examines how the different characteristics of both electric vehicles themselves and the consumers would influence the consumption behavior on electric vehicles. Data collection is based on the questionnaire design using the orthogonal experimental method and large-scale stated preference survey covering more than 2000 households in 10 central districts of Shanghai. Three types of electric vehicles, i.e. fast charging, battery swapping and slowing charging are investigated according to a set of factors, such as acquisition costs, operation and maintenance costs, charging time and convenience, mileage, preferential policies and so on. We analyze the data with the nested-logit model. Our results suggest that the mode of battery swapping with slowing charging enjoys a relatively higher proportion in Shanghai, though there is no absolutely dominating type. By group classification analysis, the male, the young, the well-educated and the well-paid groups share relatively low proportion of selecting electric vehicles. Furthermore, consumers pay more attention to daily variable usage cost and charging time instead of acquisition costs. All these suggest the necessity for the government to adjust the current supporting policy in order to cultivate the electric vehicle market effectively.
    Keywords: Electric Vehicle, Nested-Logit Model, Stated Preference Experiment, Willingness to Pay
    JEL: Q41 Q42 Q48 Q54 Q55 Q58 C65 C83
    Date: 2013–09
  2. By: Andriy Norets (Department of Economics, Princeton University); Xun Tang (Department of Economics, University of Pennsylvania)
    Abstract: We introduce an approach for semi-parametric inference in dynamic binary choice models that does not impose distributional assumptions on the state variables unobserved by the econometrician. The proposed framework combines Bayesian inference with partial identification results. The method is applicable to models with finite space of observed states. We demonstrate the method on Rust's model of bus engine replacement. The estimation experiments show that the parametric assumptions about the distribution of the unobserved states can have a considerable effect on the estimates of per-period payoffs. At the same time, the effect of these assumptions on counterfactual conditional choice probabilities can be small for most of the observed states.
    Keywords: Dynamic discrete choice models, Markov decision processes, semi-parametric inference, identification, Bayesian estimation, MCMC
    JEL: C11 C14
    Date: 2013–10–07
  3. By: Bargain, Olivier (University of Aix-Marseille II); Peichl, Andreas (ZEW Mannheim)
    Abstract: Previous reviews of static labor supply estimations concentrate mainly on the evidence from the 1980s and 1990s, Anglo-Saxon countries and early generations of labor supply modeling. This paper provides a fresh characterization of steady-state labor supply elasticities for Western Europe and the US. We also investigate the relative contribution of different methodological choices in explaining the large variation in elasticity size observed across studies. While some recent studies show that genuine preference heterogeneity across countries explains only a modest share of this variation (Bargain et al., 2013), we focus here on time changes and estimation methods as key contributors of the differences across studies. Both factors can explain larger elasticities in older studies (i.e. an increase in female labor market attachment over time and a switch from the Hausman estimation approach to discrete-choice models with tax-benefit simulations). Meta-analysis evidence suggests that smaller elasticities in the recent period may be due to the time factor, i.e. a likely change in work preferences, both in the US and in Europe.
    Keywords: household labor supply, elasticity, taxation, Europe, US
    JEL: C25 C52 H31 J22
    Date: 2013–10
  4. By: Debopam Bhattacharya
    Abstract: We consider empirical measurement of compensating/equivalent variation resulting from taxes and subsidies on goods which can be consumed only in binary form.� We incorporate unobserved heterogeneity in utility functions and establish nonparametric point-identification of the distribution of EV/CV and deadweight-loss from average structural demand functions.� Roy's identity is different in form from the continuous consumption case and related differential-equation based approaches are not useful for welfare-calculation owing to generic corner-solutions.� An application to children's school-attendance in India reveals that a 50% tuition-subsidy produces an average CV of about Rs 50 and a deadweight-loss of about Rs 18 per child per month.
    Keywords: Binary decision, taxes and subsidy, equivalent and compensating variation, unobserved heterogeneity, nonparametric identification, school-attendance, Indian National Sample Survey
    JEL: D12 D11 C14 C25
    Date: 2013–07–23
  5. By: Paola Manzini (University of St Andrews and IZA); Marco Mariotti (University of St Andrews)
    Abstract: We model the choice behaviour of an agent who suffers from imperfect attention but is otherwise von Neumann Morgenstern rational. We define inattention axiomatically through preference over menus and endowed alternatives: an agent is inattentive if it is better to be endowed with an alternative a than to be allowed to pick a from a menu in which a is is the best alternative. This property and vNM rationality on the domain of menus and alternatives imply that the agent notices each alternative with a given menu-dependent probability (attention parameter) and maximises a menu independent utility function over the alternatives he notices. Preference for flexibility restricts the model to menu independent attention parameters as in Manzini and Mariotti (2013). Our theory explains anomalies (e.g. the attraction effect) that other prominent stochastic choice theories cannot accommodate.
    Keywords: bounded rationality, stochastic choice
    JEL: D01
    Date: 2013–10–21
  6. By: Wakamori, Naoki; Welte, Angelika
    Abstract: Recent studies find that cash remains a dominant payment choice for small-value transactions despite the prevalence of alternative methods of payment such as debit and credit cards. For policy makers an important question is whether consumers truly prefer using cash or merchants restrict card usage. Using unique shopping diary data, we estimate a payment choice model with individual unobserved heterogeneity (demandside factors) while controlling for merchants’ acceptance of cards (supply-side factors). Based on a policy simulation where we impose universal card acceptance among merchants, we find that overall cash usage would decrease by only 7.7 percentage points, implying that cash usage in small-value transactions is driven mainly by consumers’ preferences.
    Keywords: Money demand; Payment methods; Consumer financial behavior
    JEL: G2 D1 C2
    Date: 2013–10–24
  7. By: Pierpaolo De Blasi (Università degli Studi di Torino and Collegio Carlo Alberto); Stefano Favaro (Università degli Studi di Torino and Collegio Carlo Alberto); Antonio Lijoi (Università di Pavia and Collegio Carlo Alberto); Ramsés H. Mena (Universidad Autónoma de México, México); Igor Prünster (Università degli Studi di Torino and Collegio Carlo Alberto); Mattteo Ruggiero (Università degli Studi di Torino and Collegio Carlo Alberto)
    Abstract: Discrete random probability measures and the exchangeable random partitions they induce are key tools for addressing a variety of estimation and prediction problems in Bayesian inference. Indeed, many popular nonparametric priors, such as the Dirichlet and the Pitman–Yor process priors, select discrete probability distributions almost surely and, therefore, automatically induce exchangeable random partitions. Here we focus on the family of Gibbs–type priors, a recent and elegant generalization of the Dirichlet and the Pitman–Yor process priors. These random probability measures share properties that are appealing both from a theoretical and an applied point of view: (i) they admit an intuitive characterization in terms of their predictive structure justifying their use in terms of a precise assumption on the learning mechanism; (ii) they stand out in terms of mathematical tractability; (iii) they include several interesting special cases besides the Dirichlet and the Pitman–Yor processes. The goal of our paper is to provide a systematic and unified treatment of Gibbs–type priors and highlight their implications for Bayesian nonparametric inference. We will deal with their distributional properties, the resulting estimators, frequentist asymptotic validation and the construction of time–dependent versions. Applications, mainly concerning hierarchical mixture models and species sampling, will serve to convey the main ideas. The intuition inherent to this class of priors and the neat results that can be deduced for it lead one to wonder whether it actually represents the most natural generalization of the Dirichlet process.
    Keywords: Bayesian Nonparametrics; Clustering; Consistency; Dependent process; Discrete nonparametric prior; Exchangeable partition probability function; Gibbs–type prior; Pitman–Yor process; Mixture model; Population Genetics; Predictive distribution; Species sampling.
    Date: 2013–10
  8. By: Del Boca, Daniela (University of Turin); Flinn, Christopher (New York University)
    Abstract: There is some controversy in the field of household economics regarding the efficiency of household decisions. We make the point that a flexible specification of spousal preferences and the household production technology precludes the possibility of using revealed preference data on household time allocations to determine the manner in which spouses interact: efficiently or inefficiently. Under strong, but standard, assumptions regarding marriage market equilibria, marital sorting patterns can be used essentially as “out of sample” information that allows us to assess whether household behavior is efficient or not. We develop a new likelihood-based metric to compare marriage market fits under the two alternative behavioral assumptions. We use a sample of households drawn from a recent wave of the Panel Study of Income Dynamics, and find strong evidence supporting the view that household behavior is (constrained) efficient.
    Keywords: bilateral matching, household time allocation, efficient outcomes, likelihood analysis
    JEL: D13 J12 J22
    Date: 2013–10

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