nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2016‒09‒11
three papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Information barriers and SRI market participation – Can sustainability and transparency labels help? By Gunnar Gutsche; Bernhard Zwergel
  2. Modeling farmers’ decisions on tea varieties in Vietnam: a multinomial logit analysis. By Phu Nguyen-Van; Cyrielle Poiraud; Nguyen To-The
  3. Information and Learning in Stated-Preference Studies By Mikołaj Czajkowski; Nick Hanley; Jacob LaRiviere; William S. Neilson; Katherine Simpson

  1. By: Gunnar Gutsche (University of Kassel); Bernhard Zwergel (University of Kassel)
    Abstract: This study empirically analyzes barriers preventing private investors from participating in the market of sustainable and responsible investments (SRI). Thereby, we link the strand of literature regarding participation costs of stockholding, i.e. information and transaction costs, to SRI market participation. The empirical analysis is based on a large online representative dataset for German financial decision makers containing data from a survey and a stated preferences discrete choice experiment, which refers to investment decisions between mutual funds. Contrary to most previous studies, we do not only differentiate between investors who are currently invested in SRI and those who are not invested. Instead we differentiate between four different investor groups, namely socially responsible, skeptical, interested, and conventional investors. We find that these groups face different barriers regarding SRI market participation. Particularly too high (perceived) information costs regarding SRI are a reason for private investors not to invest (more) in SRI. Having not received an offer by their bank seems to be a big hurdle especially for interested investors who seem to have problems overcoming the market entry barrier. Distrusting providers of SRI is an additional issue that especially hinders skeptical and conventional investors to invest (more) in SRI. Based on the experimental results, we see that information related barriers can be decreased by means of sustainability and/or transparency labels. Investor of all four groups have positive stated preferences for funds with transparency or sustainability labels. Hence, labels are an opportunity to decrease information costs of private investors and thus enhance individual demand for SRI.
    Keywords: Sustainable and responsible investments, microeconometric analysis, stated preferences, discrete choice experiment, sustainability label, transparency, distrust, participation costs, market participation
    JEL: Q56 G11 M14 C25
    Date: 2016
  2. By: Phu Nguyen-Van; Cyrielle Poiraud; Nguyen To-The
    Abstract: This paper analyzes households’ choice on tea varieties in Vietnam by using a multinomial logit model. The modelling takes into account the issue of unobserved individual heterogeneity and the endogeneity of some explanatory variables (use of chemical and organic fertilizers). The results show that important factors influencing the decision to adopt one type of tea varieties include income, age, household size, farming contract, and use of organic fertilizers, but also membership of professional associations such as the Tea Association and the Farmers Union.
    Keywords: Multinomial logit; Unobserved heterogeneity; Tea varieties; Vietnam.
    JEL: C25 C12 G12 Q18
    Date: 2016
  3. By: Mikołaj Czajkowski (Faculty of Economics, University of Warsaw); Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews); Jacob LaRiviere (Department of Economics, University of Tennessee); William S. Neilson (Department of Economics, University of Tennessee); Katherine Simpson (Economics Division, University of Stirling, Scotland)
    Abstract: We use experimental variation to influence how people learn a given amount of objective, scientific information about an unfamiliar public good. We then estimate the impact of treatment on valuations for that good in a stated preference survey. Our main treatment, a pre-survey multiple choice quiz about objective public good attributes, increased learning rates by over 60%. We find that despite increasing learning and retention rates, treatment had no statistically significant impact on mean nor variance of the distribution of valuations. We show with a very simple theoretical model this result is consistent with a model of confirmatory bias used by agents in stated preference surveys and inconsistent with other models of preference formation.
    Keywords: Information, Updating, Preferences, Public Goods
    JEL: D01 D83 Q41
    Date: 2016

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