nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2016‒11‒27
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. TOLLS VERSUS MOBILITY PERMITS: A COMPARATIVE ANALYSIS By André De Palma; Stef Proost; Ravi Seshadri; Moshe Ben-Akiva
  2. An empirical investigation of German tourist anglers’ preferences for angling in Denmark By Ole Bonnichsen; Carsten Lynge Jensen; Søren Bøye Olsen
  3. Some Like it Hot: The Role of Environmental Concern and Comfort Expectations in Energy Retrofit Decisions By Galassi, Veronica; Madlener, Reinhard
  4. The Tree that Hides the Forest: A Note on Revealed Preference By João V. Ferreira
  5. Analysis on lock-in effects by estimating for the switching costs in telecommunications bundles. By Hyungjin Kim; Hyunchul Kim
  6. Learning about Oneself: The Effects of Performance Feedback on School Choice By Bobba, Matteo; Frisancho, Veronica

  1. By: André De Palma (CES, ENS Cachan, CNRS, Universite Paris-Saclay, 94235 Cachan, France); Stef Proost (Department of Economics, KU Leuven); Ravi Seshadri (Singapore-MIT Alliance for Research and Technology (SMART) Centre); Moshe Ben-Akiva (MIT - Massachusetts Institute of technology [Cambridge])
    Abstract: To address traffic congestion, two categories of instruments are used: price regulation (for instance, road pricing or congestion tolling) and quantity regulation (credit-based mobility schemes). Although the comparison of price and quantity regulation has received significant attention in the economics community, the literature is relatively sparse in the context of transportation systems. This paper develops a methodology to compare the toll and mobility permit instruments using a simple transportation network consisting of parallel highway routes and a public transport alternative. The permits can be traded across roads. The demand for each route is determined by a mixed logit route choice model and the supply consists of static congestion. The comparison is based on the optimum social welfare which is computed for each instrument by solving a non-convex optimization problem involving the mixed logit equilibrium constraints. Equity considerations are also examined. Numerical experiments conducted across a wide range of demand/supply inputs indicate that the toll and mobility permit instruments perform very closely in efficiency terms. The permit system is on average more efficient, but only by a small margin.
    Keywords: Social Welfare, Mixed Logit,Tolls, Mobility Permits, Equity, Stochastic Demand
    Date: 2016–11–16
  2. By: Ole Bonnichsen (Department of Food and Resource Economics, University of Copenhagen); Carsten Lynge Jensen (Department of Food and Resource Economics, University of Copenhagen); Søren Bøye Olsen (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: The quality of angling sites is important for attracting tourists who enjoy recreational angling. In this paper, we conduct an empirical analysis investigating which attributes of angling sites are particularly important for attracting tourist anglers from abroad. We conduct an online survey of 968 German anglers who have recently been abroad on a holiday trip in which they went angling. We focus on the particularly dedicated anglers who state that recreational angling is important for their choice of holiday destination. A stated choice experiment is employed to investigate their preferences for environmental attributes, catch attributes, and social relation/distance attributes of the angling site. We find that preferences are heterogeneous across different angler segments. Three distinct segments of tourist anglers are identified, characterised as “catch oriented" anglers (57 %), “nature oriented” anglers (24 %) and “trophy oriented anglers (19 %)”. All three angler segments have the strong preferences for water quality. However, they differ with respect to catch preferences and preferences for social interaction on the angling site. The catch oriented focus on the hunting aspects of angling. A high catch rate as very important for them, but the size of fish is not important. Moreover this segment prefers angling in solitude without disturbance from other anglers. For the “nature oriented” it is very important that the angling takes place in "natural" conditions, the catches rates are not important but they hope to catch large fish, and it is no problem for this group if there are a few other anglers at the angling site. For the "trophy oriented" anglers it is very important to catch large fish, while the catch rate is of moderate importance and they do not mind if there are many anglers at the site. To attract tourist anglers an angling site manager may use this information to target marketing efforts towards segments of tourist that prefer the type and quality of angling characteristics of the angling site in the managers possession. Additionally, he may seek to adjust and improve the angling sites in a way that suits the preferences of specific segments.
    Keywords: recreational angling, stated choice experiment, tourism, holiday destination
    JEL: Q22 Q26 C25 Z32
    Date: 2016–10
  3. By: Galassi, Veronica (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This study investigates the role of environmental concern and comfort expectations in the decision to retrofit a dwelling and their implications for the rebound effect. We ex-ante elicit individual preferences for deep thermal energy-saving measures in residential buildings by means of a Discrete Choice Experiment (DCE) among 3,161 owner-occupiers and tenants in Germany. Besides room temperature, we include air quality, level of control over the system, noise reduction, and aesthetics of the dwelling as proxies for indoor comfort. Our model also accounts for monthly payments related to the implementation of the measure – and customized based on tenancy status, building type, and size of the dwelling – as well as technical energy cost savings. Econometric estimation provides significant results for most of the parameter coefficients. Findings show that thermal comfort preferences are heterogeneous: 33% of the respondents attach positive values to an increase in indoor temperature that would result from the deep retrofit, providing evidence in favor of a technical rebound effect. While environmental concern explains heterogeneity in most of the attributes, its interaction with thermal comfort is not significant. Thermal comfort is, however, the least important attribute in the analysis.
    Keywords: Rebound; Mixed logit; Residential buildings; Energy efficiency
    JEL: C25 D12 Q40 R20
    Date: 2016–09
  4. By: João V. Ferreira (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS)
    Abstract: The common interpretation given to choice behavior that satisfies the traditional revealed preference axioms is that it results from the maximization of a single preference. We show that choice data alone does not enable one to rule out the possibility that the choice behavior that satisfies the revealed preference axioms is instead the result of the aggregation of a collection of distinct preferences. In particular, we show that any ordering is observationally equivalent to a majoritarian aggregation of a collection of distinct dichotomous orderings. We also show that any ordering is observationally equivalent to a Borda’s aggregation of a collection of distinct linear orderings.
    Keywords: Revealed preference theory, Rationalization, Dichotomous preferences, Aggregation rules, Choice data
    JEL: B4 D01 D71
    Date: 2016–10
  5. By: Hyungjin Kim (Sungkyunkwan University); Hyunchul Kim (Sungkyunkwan University)
    Abstract: As digital convergence is spreading more than ever, the lock-in effects of bundled services in the broadcasting and telecommunication market are receiving considerable attention. Antitrust authorities have questioned whether lock-in effects impede competition in telecommunications markets. However, the answer to this question remains indecisive because few studies have attempted to quantify the switching costs in bundles. We use novel consumer level data to examine switching costs of bundled products. We use the mixed logit model to estimate the demand for bundled packages, which include mobile, Internet, and paid-TV services. We measure switching cost by the decrease in utility when consumers change their service providers from period t-1 to period t. The results show that consumers experience additional costs when they switch from bundles. Our estimates indicate that consumers pay 3,238 KRW (about 3 USD) per month for changing from Double Play Service (paid TV with Internet) to other services and 3,510 KRW for Triple Play Service. The estimates of switching costs are smaller for the bundles without any commitment period requirement. This implies that stipulated service period and penalty intensify the lock-in effects. In the counterfactuals where we remove the penalty for switching from bundles, we find that consumer surplus increases by 3,714 KRW per month. We proposed policies which reduce penalties for cancellations or shorter stipulated service periods in order to reduce switching costs.
    Keywords: Switching costs, Lock-in, Bundles, Mixed logit model
  6. By: Bobba, Matteo (Toulouse School of Economics); Frisancho, Veronica (Inter-American Development Bank)
    Abstract: We design and implement a field experiment that provides students from less advantaged backgrounds with individualized feedback on academic performance during the transition from middle to high school. The intervention reduces the gap between expected and actual performance, as well as shrinks the variance of the individual belief distributions. Guided by a simple Bayesian model, we empirically document the interplay between variance reductions and mean changes of beliefs about students' own academic ability in shaping curricular choices. The shift in revealed preferences over high school tracks enabled by the intervention affects schooling trajectories, with better performing students being assigned into more academically oriented options.
    Keywords: information, Bayesian updating, biased beliefs, school choice
    JEL: D83 I21 I24 J24
    Date: 2016–11

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