nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒03‒25
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Unraveling local preferences and willingness to pay for different management scenarios: A choice experiment to Biosphere Reserve management By Nekane Castillo-Eguskitza; David Hoyos; Miren Onaindia; Mikolaj Czajkowski
  2. Metric and Scale Effects in Consumer Preferences for Environmental Benefits By Pleshcheva, Vlada
  3. Evaluating Consumers' Choices of Medicare Part D Plans: A Study in Behavioral Welfare Economics By Michael P. Keane; Jonathan D. Ketcham; Nicolai V. Kuminoff; Timothy Neal
  4. Market design for a high-renewables European electricity system By David Newbery; Michael Pollitt; Robert Ritz; Wadim Strielkowski
  5. The Virtuous Cycle of Agreement By Philippos Louis; Matias Núñez; Dimitrios Xefteris
  6. A Model of a Randomized Experiment with an Application to the PROWESS Clinical Trial By Amanda E. Kowalski

  1. By: Nekane Castillo-Eguskitza (Faculty of Science and Technology, University of the Basque Country UPV/EHU); David Hoyos (Faculty of Economics and Busines, University of the Basque Country UPV/EHU; Research Group on Ecological Economics and Political Ecology); Miren Onaindia (Faculty of Science and Technology, University of the Basque Country UPV/EHU); Mikolaj Czajkowski (Faculty of Economic Sciences, University of Warsaw; Charles University, Environmental Center, Prague)
    Abstract: Economic valuation of ecosystem services has emerged as a valuable tool to promote conservation and sustainable land management. Our study adds to this literature, by reporting the results of a discrete choice experiment used to analyse local population preferences and willingness-to-pay for selected ecosystem services resulting from different management scenarios in the Urdaibai Biosphere Reserve (Biscay, Spain). The ecosystem services considered include quality of water bodies, agricultural production, native forest protection, biodiversity, and recreation. The results indicate that the local population is willing to financially support a new management plan focused on the improvement of ecosystem health and landscape multifunctionality and sustainability, with recreation being the least valued ecosystem service. These findings may be used to inform conservation and management policies to maximize social well-being. They can also help to prioritize investments and allocation of funding and hence minimise land use conflicts.
    Keywords: Ecosystem services, discrete choice experiment, social preferences, economic valuation, Urdaibai Biosphere Reserve
    JEL: Q51 Q15 Q24 Q25 Q26 Q28 Q57 Q58
    Date: 2019
  2. By: Pleshcheva, Vlada (Institut für Marketing Humboldt-Universität zu Berlin)
    Abstract: Xyz
    Keywords: choice architecture; environmental impact; framing effects; vehicle choice;
    JEL: D12 D90 M31 Q51
    Date: 2019–03–11
  3. By: Michael P. Keane; Jonathan D. Ketcham; Nicolai V. Kuminoff; Timothy Neal
    Abstract: We propose new methods to model behavior and conduct welfare analysis in complex environments where some choices are unlikely to reveal preferences. We develop a mixture-of-experts model that incorporates heterogeneity in consumers’ preferences and in their choice processes. We also develop a method to decompose logit errors into latent preferences versus optimization errors. Applying these methods to Medicare beneficiaries’ prescription drug insurance choices suggests that: (1) average welfare losses from suboptimal choices are small, (2) beneficiaries with dementia and depression have larger losses, and (3) policies that simplify choice sets offer small average benefits, helping some people but harming others.
    JEL: C25 D9 I13
    Date: 2019–03
  4. By: David Newbery (Energy Policy Research Group (EPRG) Judge Business School & Faculty of Economics Cambridge University); Michael Pollitt (Energy Policy Research Group (EPRG) Judge Business School & Faculty of Economics Cambridge University); Robert Ritz (Energy Policy Research Group (EPRG) Judge Business School & Faculty of Economics Cambridge University); Wadim Strielkowski (Energy Policy Research Group (EPRG) Judge Business School & Faculty of Economics Cambridge University)
    Keywords: Electricity markets, wholesale market design, renewable energy, interconnection, electricity storage, long-term contracts, capacity markets
    JEL: H23 L94 Q28 Q48
    Date: 2017–06
  5. By: Philippos Louis; Matias Núñez; Dimitrios Xefteris
    Abstract: Collective choice mechanisms are used by groups to reach decisions in the presence of diverging preferences. But can the employed mechanism affect the degree of post-decision actual agreement (i.e. preference homogeneity) within a group? And if yes, which are the features of the choice mechanisms that matter? Since it is difficult to address these questions in natural settings, we employ a theory-driven experiment where, after the group collectively decides on an issue, individual preferences can be properly elicited. We find that the use of procedures that promote apparent consensus with an outcome (i.e. agreement in manifest behaviors) generate substantially higher levels of actual agreement compared to outcome-wise identical mechanisms that push subjects to exaggerate their differences.
    Keywords: implementation, mechanism design, consensus, agreement, congruence, experiment, endorsements
    JEL: D71 D72
    Date: 2019–03
  6. By: Amanda E. Kowalski
    Abstract: I develop a model of a randomized experiment with a binary intervention and a binary outcome. Potential outcomes in the intervention and control groups give rise to four types of participants. Fixing ideas such that the outcome is mortality, some participants would live regardless, others would be saved, others would be killed, and others would die regardless. These potential outcome types are not observable. However, I use the model to develop estimators of the number of participants of each type. The model relies on the randomization within the experiment and on deductive reasoning. I apply the model to an important clinical trial, the PROWESS trial, and I perform a Monte Carlo simulation calibrated to estimates from the trial. The reduced form from the trial shows a reduction in mortality, which provided a rationale for FDA approval. However, I find that the intervention killed two participants for every three it saved.
    JEL: C1 H0 I1
    Date: 2019–03

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