nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2015‒08‒13
five papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Breaking the curse of dimensionality in conditional moment inequalities for discrete choice models By Le-Yu Chen; Sokbae Lee
  2. Value of E-Banking to Small and Medium-Sized Enterprises By Parveneh Shahnoori; Glenn P. Jenkins
  3. Estimating the Value of Life, Injury, and Travel Time Saved Using a Stated Preference Framework By Naghmeh Niroomand; Glenn P. Jenkins
  4. Prices versus preferences: taste change and revealed preference By Abi Adams; Richard Blundell; Martin Browning; Ian Crawford
  5. Rational Inattention Dynamics: Inertia and Delay in Decision-Making By Filip Matejka; Colin Stewart; Jakub Steiner

  1. By: Le-Yu Chen (Institute for Fiscal Studies and Academia Sinica); Sokbae Lee (Institute for Fiscal Studies and cemmap and SNU)
    Abstract: This paper studies inference of preference parameters in semiparametric discrete choice models when these parameters are not point-identiï¬ed and the identiï¬ed set is characterized by a class of conditional moment inequalities. Exploring the semiparametric modeling restrictions, we show that the identiï¬ed set can be equivalently formulated by moment inequalities conditional on only two continuous indexing variables. Such formulation holds regardless of the covariate dimension, thereby breaking the curse of dimensionality for nonparametric inference based on the underlying conditional moment inequalities. We also extend this dimension reducing characterization result to a variety of semi-parametric models under which the sign of conditional expectation of a certain transformation of the outcome is the same as that of the indexing variable.
    Date: 2015–06
  2. By: Parveneh Shahnoori (Eastern Mediterranean University, North Cyprus); Glenn P. Jenkins (Queen’s University, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: Policy makers in many countries encourage small and medium-sized enterprises (SMEs) to become more engaged in international trade activities. A complementary element to international trade is access to low-cost banking services. For policy makers and bank regulatory agencies it is important to know the value that SMEs place on alternative types of online banking services (e-banking). Using a choice experiment and a mixed logit model, we evaluate the value to these businesses of attributes of online banking, namely travel time saved, waiting time saved, unlimited 24/7 accessibility, and a high level of security. From this analysis an estimate is made of the willingness to pay for alternative packages of such services used by the SMEs in the United Arab Emirates free-trade zones. The results of this research show that 24/7 accessibility to banking services and a high level of security are statistically highly significant and valuable to these enterprises.
    Keywords: willingness to pay, online banking, SME, free-trade zone, mixed logit model
    JEL: G21 D61
    Date: 2015–09
  3. By: Naghmeh Niroomand (Eastern Mediterranean University, North Cyprus); Glenn P. Jenkins (Queen’s University, Canada and Eastern Mediterranean University, North Cyprus)
    Abstract: The incidence of death and injury from automobile accidents in North Cyprus is 3.6 times greater than the average for the EU. With the prospect of North Cyprus entering the EU, many investments will need to be undertaken in order to reduce these figures and reach EU norms. A key task will be to select the investments that are justified on the basis of a cost–benefit or cost–effectiveness analysis and not to waste resources through poor project selection. The objective of this study is to provide local estimates of the value of a statistical life and injury along with the value of time savings. These are among the key parameters needed for the evaluation of the benefits of such projects. In this study we conducted a stated choice experiment to identify the preferences and trade-offs of automobile drivers in North Cyprus for improved travel times, travel costs and safety. The choice of route was examined using mixed logit models to obtain the marginal utilities associated with each attribute of the routes that consumers choose. These estimates were used to assess the individuals’ willingness to pay (WTP) to avoid fatalities and injuries and to save travel time. We then used the results to obtain community-wide estimates of the value of a statistical life (VSL) saved, the value of injury (VI) prevented, and the value per hour of travel time saved.
    Keywords: Willingness to pay; choice experiment; value of risk reduction; value of a statistical life; road safety; car drivers
    JEL: D12 D61 Q50 J17 R41 D12
    Date: 2015–08
  4. By: Abi Adams (Institute for Fiscal Studies and University of Oxford); Richard Blundell (Institute for Fiscal Studies and IFS and UCL); Martin Browning (Institute for Fiscal Studies and Nuffield College, Oxford); Ian Crawford (Institute for Fiscal Studies and University of Oxford)
    Abstract: A systematic approach for incorporating taste variation into a revealed preference framework for heterogeneous consumers is developed. We create a new methodology that enables the recovery of the minimal variation in tastes that are required to rationalise observed choice patterns. This approach is used to examine the extent to which changes in tobacco consumption have been driven by price changes or by taste changes, and whether the significance of these two channels varies across socioeconomic groups. A censored quantile approach is used to allow for unobserved heterogeneity and censoring of consumption. Statistically significant educational differences in the marginal willingness to pay for tobacco are recovered. More highly educated cohorts are found to have experienced a greater shift in their effective tastes away from tobacco.
    Date: 2015–03
  5. By: Filip Matejka (CERGE-EI); Colin Stewart (University of Toronto); Jakub Steiner (Cerge-ei)
    Abstract: We solve a general class of dynamic rational-inattention problems in which an agent repeatedly acquires costly information about an evolving state and selects actions. The solution resembles the choice rule in a dynamic logit model, but it is biased towards an optimal default rule that does not depend on the realized state. We apply the general solution to the study of (i) the sunk-cost fallacy; (ii) inertia in actions leading to lagged adjustments to shocks; and (iii) the tradeoff between accuracy and delay in decision-making.
    Date: 2015

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