nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2018‒03‒19
four papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. "The Demand for Different Types of Childcare by Working Mothers in Palembang, South Sumatera, Indonesia" By Marieska Lupikawaty
  2. Revealed preferences over risk and uncertainty By Matthew Polisson; John K.-H. Quah
  3. Consumer choice under limited attention when alternatives have different information costs By Frank Huettner,; Tamer Boyaci,; Yalcin Akcay
  4. Is there complementarity between labels and brands? Evidence from small French co-operatives By Fares, M’hand; Raza, Saqlain; Thomas, Alban

  1. By: Marieska Lupikawaty (Business Administration Department, State Polytechnic of Sriwijaya, Indonesia.)
    Abstract: "Objective – This study aims to analyse the factors effecting the different demand on childcare services made by working mothers, focusing on two types of childcare. Methodology/Technique – The analysis method used is a logit regression with a binary dependent variable worth. The respondents are working mothers who with young children, living in Palembang. This research uses primary data to perform the data collection, through the use of questionnaires and interviews. Findings – The results show that the cost of daycare and the hours spent in daycare have an affect on a working mother's choice of the type of daycare used. Novelty – This study represents a different approach from previous studies because: (i) the study examines whether the cost of child care has an effect on a working mothers' choice of the type of daycare and (ii) the study also tests whether the number of hours mothers leave their children in daycare has an effect on their choice of daycare. "
    Keywords: Demand; Child Care; Working Mothers; Palembang; Indonesia.
    JEL: J10 J13
    Date: 2017–12–05
  2. By: Matthew Polisson (University of St Andrews); John K.-H. Quah (Johns Hopkins University)
    Abstract: We develop a nonparametric procedure, called the lattice method, for testing the consistency of contingent consumption data with a broad class of models of choice under risk and under uncertainty. Our method allows for risk loving and elation seeking behavior and can be used to calculate, via Afriat’s efficiency index, the magnitude of violations from a particular model of choice. We evaluate the performance of different models (including expected utility, disappointment aversion, rank dependent utility, mean-variance utility, and stochastically monotone utility) in the data collected by Choi et al. (2007), in terms of pass rates, power, and predictive success.
    Keywords: expected utility, rank dependent utility, disappointment aversion, Bronars power, predictive success, generalized axiom of revealed preference, first order stochastic dominance, mean-variance utility, Afriat’s efficiency index
    JEL: C14 C60 D11 D12 D81
    Date: 2017–04–26
  3. By: Frank Huettner, (ESMT European School of Management and Technology); Tamer Boyaci, (ESMT European School of Management and Technology); Yalcin Akcay (Melbourne Business School)
    Abstract: Consumers often do not have complete information about the choices they face and therefore have to spend time and effort in acquiring information. Since information acquisition is costly, consumers trade-off the value of better information against its cost, and make their final product choices based on imperfect information. We model this decision using the rational inattention approach and describe the rationally inattentive consumer’s choice behavior when she faces alternatives with different information costs. To this end, we introduce an information cost function that distinguishes between direct and implied information. We then analytically characterize the optimal choice probabilities. We find that non-uniform information costs can have a strong impact on product choice, which gets particularly conspicuous when the product alternatives are otherwise very similar. There are significant implications on how a seller should provide information about its products and how changes to the product set impacts consumer choice. For example, non-uniform information costs can lead to situations where it is disadvantageous for the seller to provide easier access to information for a particular product, and to situations where the addition of an inferior (never chosen) product increases the market share of another existing product (i.e., failure of regularity). We also provide an algorithm to compute the optimal choice probabilities and discuss how our framework can be empirically estimated from suitable choice data.
    Keywords: discrete choice, rational inattention, information acquisition, non-uniform information costs, strong failure of regularity
    JEL: D40 D80
    Date: 2016–08–18
  4. By: Fares, M’hand; Raza, Saqlain; Thomas, Alban
    Abstract: Many quality signals—both private and public—have been used to foster the development of food quality in the agro-food markets: mainly brands and common certified labels. Previous research has typically focused on either brand or certified label efficiency independently, while in many instances both signals coexist. Agricultural products that pair brand names and certified labels—such as indications of origin—are indeed common: e.g., Roquefort cheese, Scotch whiskeys, and most of the French wines. The objective of our paper is to take into account this coexistence by empirically analyzing the complementarity and/or substitutability that may exist between labels and brands. To do so, we estimate different models of adoption and an original multinomial probit model of complementarity that we test on a database of the quality-signaling strategies from 993 small French cooperatives. Our main result shows that there is a clear interaction effect between brand and certified label signal strategies, but it is a substitution effect rather than a complementary one.
    Keywords: Complementarity; Quality signals; Multinomial probit
    Date: 2018–02

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