nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2016‒07‒23
three papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Efficeincy Gains in Rank-ordered Multinomial Logit Models By Arie Beresteanu
  2. Human values and aspirations for coastal waters of the Kimberley: Social values and management preferences using Choice Experiments By Spencer-Cotton, Alaya; Kragt, Marit Ellen; Burton, Michael
  3. Fashion, fads and the popularity of choices: micro-foundations for non-equilibrium consumer theory By Jean-Francois Mercure

  1. By: Arie Beresteanu
    Abstract: This paper considers estimation of discrete choice models when agents report their rankingof the alternatives (or some of them) rather than just the utility maximizing alternative. Weinvestigate the parametric conditional rank-ordered Logit model. We show that conditionsfor identifi cation do not change even if we observe ranking. Moreover, we ll a gap in theliterature and show analytically and by Monte Carlo simulations that efficiency increases as weuse additional information on the ranking.
    Date: 2016–01
  2. By: Spencer-Cotton, Alaya; Kragt, Marit Ellen; Burton, Michael
    Abstract: This is a report from the Kimberley Research Node Project 2.1.2 “Human values and aspirations for coastal waters of the Kimberley” research project funded by the Western Australian Government and administered by the Western Australian Marine Science Institution. The study area is the Kimberley coastline and waters extending from south western part of Eighty Mile Beach to the Northern Territory border. This research supports the management intentions of the State Government to establish a network of marine parks in the State waters along the Kimberley coast. This report presents the findings of an online choice experiment survey conducted with a range of participants and stakeholders. The online survey comprised of two parts, it was a collaboration with Murdoch University. In the choice experiment, respondents were presented with two active management options, and a third ‘no-action’ option. A particular research focus of this choice experiment is the impact of making the choice experiment questions spatially explicit. Researchers were interested in people’s choices for management options that were linked to a specific region (or ‘management zones’) of the Kimberley coast. In this study the Kimberley region was divided into six management zones, determined in consultation with key stakeholders. The management options contained four spatially specific attributes and an associated management cost. The spatially specific attributes were: percentage of State waters zoned as sanctuary areas; number of Aboriginal rangers, level of average recreational facilities in the region, and whether additional development (as defined using a description and photograph) would occur in the region. Mixed logit models were estimated to account for random taste differences across respondents. Interactions between socio-economic variables and the choice attributes were included to account for systematic heterogeneity. Separate models were estimated for each sample as preliminary analysis suggested there is unlikely to be a single unifying model of preferences, Results suggest that hold values and preferences for the choice attributes presented. Focussing on the key management question of providing marine sanctuary zones in State waters, all models confirmed that increasing the area of sanctuary zones is valued by WA residents. Increasing recreation facilities to a relatively high level was generally not valued or valued negatively. This change reduces welfare especially in the four northern more remote zones (Dampier Peninsula, Buccaneer Archipelago, Camden Sound, and North Kimberley). The same pattern emerges for the coastal development attribute. Coastal development was defined as a relatively small change, representing impact on the sense of remoteness. There was a strong aversion to this change, particularly in the northern zones. Although there was some heterogeneity in preferences, the overall picture that emerges from the analysis is that respondents are prepared to pay to increase environmental protection in coastal waters and wish to avoid development along the coast, even where this would improve current public access.
    Keywords: Non-market valuation, Choice experiments, Kimberley, Coastal management, Sense of place, Existence values, Environmental Economics and Policy, Public Economics, Q26, Q51, Q57,
    Date: 2016–07–01
  3. By: Jean-Francois Mercure
    Abstract: Knowledge acquisition by consumers is a key process in the diffusion of innovations. However, in standard theories of the representative agent, agents do not learn and innovations are adopted instantaneously. Here, we show that in a discrete choice model where utility-maximising agents with heterogenous preferences learn about products through peers, their stock of knowledge on products becomes heterogenous, fads and fashions arise, and transitivity in aggregate preferences is lost. Non-equilibrium path-dependent dynamics emerge, the representative agent exhibits behavioural rules different than individual agents, and aggregate utility cannot be optimised. Instead, an evolutionary theory of product innovation and diffusion emerges.
    Date: 2016–07

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