nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒08‒19
sixteen papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Uninsured by Choice? A Choice Experiment on Long Term Care Insurance By Akaichi, Faical; Costa-Font, Joan; Frank, Richard
  2. Quantifying benefit losses from poor governance of climate change adaptation projects: A discrete choice experiment with farmers in Kenya By Nthambi, Mary; Wätzold, Frank; Markova-Nenova, Nonka
  3. The Inverse Product Differentiation Logit Model By Mogens Fosgerau; Julien Monardo; André de Palma
  4. Smokers’ Rational Lexicographic Preferences for Cigarette Package Warnings: A Discrete Choice Experiment with Eye Tracking By Jeffrey E. Harris; Mariana Gerstenblüth; Patricia Triunfo
  5. Animal welfare attributes in dairy production in Europe: Lessons learned from a German discrete choice experiment By Koik, Yascha Lena; Thiele, Holger D.; Enneking, Ullrich
  6. A Semiparametric Smooth Coefficient Estimator for Recreation Demand By Liu, Weiwei; Egan, Kevin J
  7. Does Change in Respondents’ Attention Matter in Estimating Willingness to Pay from Choice Experiments? By Hildebrand, Kayla; Chung, Chanjin; Boyer, Tracy A.
  8. The Individual Process of Neighborhood Change and Residential Segregation in 1940 - An Implication of Discrete-Choice Model By Karl X.Y. Zou; Mark Fossett
  9. Heterogeneous Demand and Supply for an Insurance-Linked Credit Product in Kenya: A Stated Choice Experiment Approach By Shee, Apurba; Turvey, Calum G.; Marr, Ana
  11. Swine producer willingness to pay for Tier 1 disease risk mitigation under ambiguity By Lee, Jiwon; Schulz, Lee; Tonsor, Glynn T.
  12. Privacy-Aware Distributed Mobility Choice Modelling over Blockchain By David Lopez; Bilal Farooq
  13. Wine tasting: consumer preferences for wine, choice, and sensory information By Weerasekara, Nadeeka D K; Streletskaya, Nadia A.; Li, Jie
  14. Understanding the adoption of crop protection smartphone apps: An application of the Unified Theory of Acceptance and Use of Technology By Michels, Marius; Bonke, Vanessa; Mußhoff, Oliver
  15. Strategic behavior in stated preferences and the demand for gene-edited canola oil By An, Henry; Adamowicz, Wiktor L.; Lloyd-Smith, Patrick
  16. Explaining Consumer Preference for Product Labels Using Visual Attention Data By Wei, Xuan; Khachatryan, Hayk; Rihn, Alicia

  1. By: Akaichi, Faical (SRUC Edinburgh); Costa-Font, Joan (London School of Economics); Frank, Richard (Harvard University)
    Abstract: We examine evidence from two unique discrete choice experiments (DCE) on long term care insurance and several of its relevant attributes, and more specifically, choices made by 15,298 individuals in the United States with and without insurance. We study the valuation of the following insurance attributes, namely daily insurance benefit, insurance coverage, the compulsory and voluntary nature of the insurance policy design, alongside the costs (insurance premium) and health requirements This paper investigates respondents' preferences and willingness to pay (WTP) for these care insurance's attributes using a random parameter logit model, and assess the heterogeneity of choice responses using demographic, socioeconomic and attitudinal motivations to segment response to insurance choices. We find that an increase in the insurance premium by an additional 100US$ would reduce insurance uptake by 1pp. Insurance policy uptake is higher when it provides benefits for the lifetime (the monthly marginal WTP being $178.64), and voluntary (the monthly marginal WTP increases by an extra $74.71) as opposed to universal, and when it forgoes health checks (the monthly marginal WTP increases by an extra 28US$).
    Keywords: long term care insurance, constrained choices, self-insurance, behavioural constraints, insurance design
    JEL: I18
    Date: 2019–07
  2. By: Nthambi, Mary; Wätzold, Frank; Markova-Nenova, Nonka
    Abstract: Climate change impacts pose a great challenge to agriculture in sub-Saharan Africa as droughts become more frequent and more severe. A major roadblock to implementing climate change adaptation measures is poor governance. Given their experience with governing organizations, farmers are highly suitable respondents to assess the appropriateness of different governing organizations to implement adaptation measures on the ground. We surveyed 300 farmers in Makueni County in Kenya applying the choice experiment method to assess their preferences in relation to different attributes of a sand storage dam project to enhance rainwater harvesting as an adaptation measure. Attributes include the organization governing the dam construction, dam wall height and volume of water harvested, the type of pump used to distribute water, number of tree rows planted to prevent silting, and labor time farmers are willing to contribute to dam construction. Responses were analyzed using the mixed logit model. Our key result shows that farmers prefer an NGO as the governing organization, followed closely by a farmer network and, with some distance, a government institution. For the whole of Makueni County, we find that benefit losses of $ 482,766 occur if farmer networks are the governing organizations instead of NGOs and $ 2,679,706 if government institutions govern the dam construction instead of NGOs. While the importance of governance structures for development is well-known, our study is novel as it quantifies the benefit losses that occur due to poor governance in the field of climate change adaptation. On a methodological level, our study contributes to improving the application of choice experiments in developing countries as it draws attention to the careful selection of the payment vehicle. In terms of policy recommendations, our results suggest that substantial benefit losses may occur if appropriate governing organizations are not selected when implementing much needed climate adaptation measures.
    Keywords: Good governance, climate change adaptation measures, governing organizations, choice modeling, payment vehicle, willingness to pay
    JEL: Q5 Q51 Q54
    Date: 2018–12–18
  3. By: Mogens Fosgerau (DTU - Technical University of Denmark [Lyngby]); Julien Monardo (ENS Cachan - École normale supérieure - Cachan, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); André de Palma (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique)
    Abstract: This paper proposes an empirical model of inverse demand for differentiated products: the Inverse Product Differentiation Logit (IPDL) model. The IPDL model generalizes the commonly used nested logit model to allow richer substitution patterns, including complementarity. Nevertheless, the IDPL model can be estimated by two-stage least squares using aggregate data. We apply the IDPL model to data on ready-to-eat cereals in Chicago in 1991-1992, and find that complementarity is pervasive in this market. We then show that the IPDL model belongs to a wider class of inverse demand models in which products can be complements, and which is sufficiently large to encompass a large class of discrete choice demand models. We establish invertibility for this wider class, thus extending previous results on demand inversion.
    Keywords: Demand estimation,Demand invertibility,Differentiated products,Discrete choice,Nested logit,Random utility,Representative consumer
    Date: 2019–07–15
  4. By: Jeffrey E. Harris (Department of Economics, Massachusetts Institute of Technology); Mariana Gerstenblüth (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Patricia Triunfo (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: We asked 97 cigarette smokers to make a series of 12 binary choices between experimental cigarette packages with varying warnings and background colors. Each smoker had to decide which of the two packages contained cigarettes less risky for his health. We tested whether the smokers, confronted with warnings that were repugnant and threatening to many of them, could still make choices that adhered to the standard axioms of rational choice. We supplemented our observations on smokers’ choices with data on their eye movements. We find that participants universally made choices consistent with a complete, transitive preference ordering. We find little evidence of inconsistent choices violating the weak axiom of revealed preference. In a majority of smokers, we find strong evidence of the use of a lexicographic decision rule to assess the riskiness of a cigarette package. These smokers first ranked the two packages solely on the basis of their warnings. Only when the two packages had the same warning did they rankthe packages on the basis of their color. The data on eye tracking strongly confirmed the lexicographic nature of the underlying decision rule. Our studyrepresentsan entirely different angle of inquiry into thequestion of rational addiction.
    Keywords: addiction, cigarettes, smoking, health warnings, rationality, discrete choice experiment, eye tracking, transitivity, additive utility, lexicographic preferences, context-dependent preferences, response time, drift diffusion model, Schelling-Thaler-Shefrin dual-self model
    JEL: D12 D83 D87 D91 I12 M31
    Date: 2018–09
  5. By: Koik, Yascha Lena; Thiele, Holger D.; Enneking, Ullrich
    Keywords: Demand and Price Analysis
    Date: 2019–06–25
  6. By: Liu, Weiwei; Egan, Kevin J
    Abstract: We introduce a semiparametric smooth coefficient estimator for recreation demand data that allows more flexible modeling of preference heterogeneity. We show that our sample of visitors each has an individual statistically significant price coefficient estimate leading to clearly nonparametric consumer surplus and willingness to pay (WTP) distributions. We also show mean WTP estimates that are different in economically meaningful ways for every demographic variable we have for our sample of beach visitors. This flexibility is valuable for future researchers who can include any variables of interest beyond the standard demographic variables we have included here. And the richer results, price elasticities, consumer surplus and WTP estimates, are valuable to planners and policymakers who can easily see how all these estimates vary with characteristics of the population of interest.
    Keywords: Consumer surplus, recreation demand, semiparametric model, travel cost, willingess to pay
    JEL: C14 Q51
    Date: 2019–06–23
  7. By: Hildebrand, Kayla; Chung, Chanjin; Boyer, Tracy A.
    Keywords: Research Methods/ Statistical Methods
    Date: 2019–06–25
  8. By: Karl X.Y. Zou (Texas A&M University); Mark Fossett
    Abstract: Using the 1940 restricted census microdata, this study develops discrete choice models to investigate how individual and household characteristics, along with the features of neighborhoods of residence affect individual choices of residential outcomes in the US cities. This study will make several innovations: (1) We will take advantage of 100% census microdata on the whole population of the cities to establish discrete-choice models estimating the attributes of alternatives (e.g. neighborhoods) and personal characteristics simultaneously. (2) This study will set a routine of reconstructing personal records to the data structure eligible for discrete-choice model and then test whether or not the assumptions are violated. (3) This study will assess the extent and importance of discrimination and residential preferences respectively through the model specification. The results suggest that both in-group racial and class preferences can explain the individual process of neighborhood changes. All groups somehow practice out-group avoidance based on race and social class. Such phenomena are more pronounced in multi-racial cities.
    Date: 2019–08–02
  9. By: Shee, Apurba; Turvey, Calum G.; Marr, Ana
    Keywords: International Development
    Date: 2019–06–25
  10. By: Chen, Maolong; Myers, Robert J.; Hu, Chaoran
    Keywords: Research Methods/ Statistical Methods
    Date: 2019–06–25
  11. By: Lee, Jiwon; Schulz, Lee; Tonsor, Glynn T.
    Keywords: Agricultural and Food Policy
    Date: 2019–06–25
  12. By: David Lopez; Bilal Farooq
    Abstract: A generalized distributed tool for mobility choice modelling is presented, where participants do not share personal raw data, while all computations are done locally. Participants use Blockchain based Smart Mobility Data-market (BSMD), where all transactions are secure and private. Nodes in blockchain can transact information with other participants as long as both parties agree to the transaction rules issued by the owner of the data. A case study is presented where a mode choice model is distributed and estimated over BSMD. As an example, the parameter estimation problem is solved on a distributed version of simulated annealing. It is demonstrated that the estimated model parameters are consistent and reproducible.
    Date: 2019–08
  13. By: Weerasekara, Nadeeka D K; Streletskaya, Nadia A.; Li, Jie
    Keywords: Institutional and Behavioral Economics
    Date: 2019–06–25
  14. By: Michels, Marius; Bonke, Vanessa; Mußhoff, Oliver
    Abstract: There is a steady increase in smartphone apps available to improve farmers' decision making with respect to crop protection. While current studies have focused on smartphone adoption in general and farmers' general willingness to pay for crop protection smartphone apps, none have focused on the initial adoption decision. Furthermore, it has not been studied yet which app functions are perceived as useful and which are actually used by farmers. Based on an online survey of 207 German farmers conducted in 2019, we investigated farmers' adoption decision for crop protection smartphone apps based on the Unified Theory of Acceptance and Use of Technology (UTAUT) framework applying partial least squares equation modelling and a binary logit model. Descriptive results show that 95 % of the surveyed farmers use a smartphone, but only 71 % use a crop protection smartphone app. Apps providing infor-mation about weather, pest scouting and infestations forecasts are perceived as most useful by the majority of farmers. However, reported use fell short of reported usefulness. All hypothe-ses of the UTAUT model could be verified. 72 % of the variation in the behavioral intention to use a crop protection smartphone app and 50 % of the variation in the actual adoption is explained by the model. The results are of interest for policy makers in the field of digitaliza-tion in agriculture as well as providers and developers of crop protection smartphone apps.
    Keywords: crop protection,partial least squares structural equation modelling,precision agriculture,smartphone,smartphone apps,unified theory of acceptance and use of technology
    Date: 2019
  15. By: An, Henry; Adamowicz, Wiktor L.; Lloyd-Smith, Patrick
    Keywords: Research and Development/Tech Change/Emerging Technologies
    Date: 2019–06–25
  16. By: Wei, Xuan; Khachatryan, Hayk; Rihn, Alicia
    Keywords: Research and Development/Tech Change/Emerging Technologies
    Date: 2019–06–25

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