nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2015‒02‒05
two papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Disentangling the Influence of Knowledge on Processing Strategies in Choice Modelling. By Erlend Dancke Sandorf; Danny Campbell; Nick Hanley
  2. New exporter dynamics By Willis, Jonathan L.; Ruhl, Kim J.

  1. By: Erlend Dancke Sandorf (The Norwegian College of Fishery Science, Faculty of Biosciences, Fisheries and Economics, University of Tromsø – The Arctic University of Norway); Danny Campbell (Economics Division, University of Stirling, Scotland); Nick Hanley (School of Geography and Sustainable Development, University of St. Andrews)
    Abstract: This paper seeks to disentangle the effect of knowledge on processing strategies using data from a discrete choice experiment on cold-water corals in Norway. Cold-water corals are a deep-sea ecosystem for which we have limited scientific knowledge and for which public awareness is low, and consequently is likely to be an unfamiliar good to many members of the public. One simplifying strategy often employed by respondents in a choice experiment is to simply ignore some of the attributes, i.e. attribute non-attendance. After the initial presentation of the good, before answering the choice cards, the respondents were given a quiz over the material covered in the presentation. This provides us with an ex ante measure of their knowledge. We use a combination of discrete and continuous mixture models to disentangle the effects of variations in knowledge about the good. We use a respondent’s quiz score as covariates in the probability function of attending to an attribute. Our results show that knowledge, as measured by the quiz score, has a significant effect on the probability of attending to the attribute for three out of four attributes. This has direct implication for practitioners in that proper information may help avoid the use of simplifying strategies.
    Keywords: Attribute Non-Attendance, Discrete Choice Experiment, Knowledge, Attribute Processing Strategies, Cold water coral, ecosystem services
    JEL: Q51 Q57
    Date: 2015–02
  2. By: Willis, Jonathan L. (Federal Reserve Bank of Kansas City); Ruhl, Kim J.
    Abstract: Models in which heterogeneous plants face sunk export entry costs are standard tools in the international trade literature. How well do these models account for the observed dynamics of new exporters? We document that new exporters initially export small amounts and — conditional on continuing in the export market — grow gradually over several years. New exporters are most likely to exit the export market in their first few years. We construct a dynamic discrete choice model of exporting and find that the standard model cannot replicate the behavior of new exporters: New exporters grow too large too quickly and live too long. We assess the quantitative importance of accounting for new exporter dynamics by extending the model to account for these facts. In this model, the present value of exporting falls relative to the baseline model. As a result, the entry costs needed to account for the data are three times smaller than in the baseline model
    Date: 2014–11–01

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