nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒05‒06
five papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Variational Bayesian Inference for Mixed Logit Models with Unobserved Inter- and Intra-Individual Heterogeneity By Rico Krueger; Prateek Bansal; Michel Bierlaire; Ricardo A. Daziano; Taha H. Rashidi
  2. An Experimental Analysis of Overconfidence in Tariff Choice By Dowling, Katharina; Spann, Martin; Stich, Lucas
  3. Understanding Migration Aversion Using Elicited Counterfactual Choice Probabilities By Koşar, Gizem; Ransom, Tyler; van der Klaauw, Wilbert
  4. The benefit of management policy of Seoul on airborne particulate matter: An application of contingent valuation By Hwang, In Chang; Son, Wonik
  5. Matching for the Israeli "Mechinot" Gap-Year Programs: Handling Rich Diversity Requirements By Yannai A. Gonczarowski; Lior Kovalio; Noam Nisan; Assaf Romm

  1. By: Rico Krueger; Prateek Bansal; Michel Bierlaire; Ricardo A. Daziano; Taha H. Rashidi
    Abstract: Variational Bayes (VB) methods have emerged as a fast and computationally-efficient alternative to Markov chain Monte Carlo (MCMC) methods for Bayesian estimation of mixed logit models. In this paper, we derive a VB method for posterior inference in mixed multinomial logit models with unobserved inter- and intra-individual heterogeneity. The proposed VB method is benchmarked against MCMC in a simulation study. The results suggest that VB is substantially faster than MCMC but also noticeably less accurate, because the mean-field assumption of VB is too restrictive. Future research should thus focus on enhancing the expressiveness and flexibility of the variational approximation.
    Date: 2019–05
  2. By: Dowling, Katharina (LMU Munich); Spann, Martin (LMU Munich); Stich, Lucas (LMU Munich)
    Abstract: Digitalization has changed existing business models and enabled new ones. This development has been accompanied by the emergence of new pricing options and the possibility of applying established pricing models in new domains. Today, consumers can, for example, pay for accessing a product instead of buying it. Within such sharing services, consumers can usually choose between a flat-rate and a pay-per-use option. Prior work demonstrated that consumers\' tariff choices are often systematically biased. Overconfidence was identified as one of the key drivers. Yet, prior research is non-experimental and focused on the so-called flat-rate bias. By contrast, we examine the effects of overconfidence on tariff choice experimentally. We show that overconfident consumers overestimate their ability to predict their future usage, which leads them to underestimate their actual usage, and eventually leads them to choose a pay-per-use (vs. a flat-rate) option more frequently. We discuss theoretical and managerial implications.
    Keywords: overconfidence; tariff choice; pay-per-use; flat-rate; experiment;
    Date: 2019–05–02
  3. By: Koşar, Gizem (Federal Reserve Bank of New York); Ransom, Tyler (University of Oklahoma); van der Klaauw, Wilbert (Federal Reserve Bank of New York)
    Abstract: Residential mobility rates in the U.S. have fallen considerably over the past three decades. The cause of the long-term decline remains largely unexplained. In this paper we investigate the relative importance of alternative drivers of residential mobility, including job opportunities, neighborhood and housing amenities, social networks and housing and moving costs, using data from two waves of the NY Fed's Survey of Consumer Expectations. Our hypothetical choice methodology elicits choice probabilities from which we recover the distribution of preferences for location and mobility attributes without concerns about omitted variables and selection biases that hamper analyses based on observed mobility choices alone. We estimate substantial heterogeneity in the willingness-to-pay (WTP) for location and housing amenities across different demographic groups, with income considerations, proximity to friends and family, neighbors' shared norms and social values, and monetary and psychological costs of moving being key drivers of migration and residential location choices. The estimates point to potentially important amplifying roles played by family, friends, and shared norms and values in the decline of residential mobility rates.
    Keywords: migration, geographic labor mobility, neighborhood characteristics
    JEL: J61 R23 D84
    Date: 2019–04
  4. By: Hwang, In Chang; Son, Wonik
    Abstract: There is an increasing concern on particulate matter (PM) management in Seoul. The annual mean PM concentration of Seoul is far higher than the World Health Organization guideline and its decreasing rate has been slowed since 2012. Seoul Metropolitan Government has made various efforts to solve the problem. In particular, after an open forum held in June 2017, the Ten Measures for Fine Particles were established. Since the management of fine particles would enforce a huge budget (annual mean of 146 million US dollar) it requires a legitimate validation by the benefit analysis. This paper aims to estimate the benefit of the management policy of Seoul on airborne particulate matter. The benefit is estimated by the contingent valuation method. The estimation by the Spike model shows that the annual willingness to pay (WTP) per household for the management of airborne particulate matter is 126 US dollar (or 138,107 Korean won) (95% confidence interval of 114 to 137 US dollar). The applications of the other statistical models are also analyzed. Considering the total number of households, annual benefit of the management policy of Seoul on airborne particulate matter is 492 million US dollar annually (95% confidence interval of 446 to 537 million US dollar). A simple comparison shows that the benefit of the management of airborne particulate matter in Seoul is 3~4 times higher than the incurred expense.
    Keywords: Air pollution; Contingent valuation; Particulate matter; Willingness to pay
    JEL: H7 Q51 Q53
    Date: 2019–05–02
  5. By: Yannai A. Gonczarowski; Lior Kovalio; Noam Nisan; Assaf Romm
    Abstract: We describe our experience with designing and running a matching market for the Israeli "Mechinot" gap-year programs. The main conceptual challenge in the design of this market was the rich set of diversity considerations, which necessitated the development of an appropriate preference-specification language along with corresponding choice-function semantics, which we also theoretically analyze to a certain extent. This market was run for the first time in January 2018 and matched 1,607 candidates (out of a total of 2,580 candidates) to 35 different programs, and has been adopted by the Joint Council of the "Mechinot" gap-year programs for the foreseeable future.
    Date: 2019–05

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