nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2019‒10‒14
fourteen papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Trade-offs between carbon sequestration, landscape aesthetics and biodiversity in a cost-benefit analysis of land use options in Norway By Endre Kildal Iversen; Kristine Grimsrud; Henrik Lindhjem; Jette Bredahl Jacobsen
  2. Past and present outage costs – A follow-up study of households’ willingness to pay to avoid power outages By Carlsson, Fredrik; Kataria, Mitesh; Lampi, Elina; Martinsson, Peter
  3. Benefits of regulation vs competition where inequality is high: The case of mobile telephony in South Africa By Ryan Hawthrone; Lukasz Grzybowksi
  4. A Psychometric Investigation of the Personality Traits Underlying Individual Tax Morale By Nicolas Jacquemet; Stéphane Luchini; Antoine Malezieux; Jason Shogren
  5. Adapting Herzberg: Predicting Attendees' Satisfaction and Intention to Re-Visit a Festival - An Ordered Logit Approach By Love Odion Idahosa; Tembi Maloney Tichaawa
  6. Can local communities afford full control over wildlife conservation? The Case of CAMPFIRE in Zimbabwe By Herbert Ntuli; Edwin Muchapondwa; Boscow Okumu
  7. Narrowing the ‘digital divide’: the role of complementarities between fixed and mobile data in South Africa By Ryan Hawthrone; Lukasz Grzybowksi
  8. Informational Content of Factor Structures in Simultaneous Binary Response Models By Shakeeb Khan; Arnaud Maurel; Yichong Zhang
  9. Facing disruption: the cinema value chain in the digital age By Elisa Salvador; Jean-Paul Simon; Pierre-Jean Benghozi
  10. Technology adoption and pro-social preference By Raphaël Soubeyran
  11. Met hervorming van de AOW-leeftijd keert voor even de rust terug By van Dalen, Harry; Henkens, C.J.I.M.; de Beer, J.
  12. "Particle rolling MCMC" By Naoki Awaya; Yasuhiro Omori
  13. Risk as Challenge: A Dual System Stochastic Model for Binary Choice Behavior By Samuel Shye; Ido Haber
  14. Learning under Diverse World Views: Model-Based Inference By George J. Mailath; Larry Samuelson

  1. By: Endre Kildal Iversen; Kristine Grimsrud (Statistics Norway); Henrik Lindhjem; Jette Bredahl Jacobsen
    Abstract: Norway is considering a national afforestation program for greenhouse gas (GHG) sequestration on recently abandoned semi-natural pastureland. However, the program may have negative impacts on landscape aesthetics and biodiversity. We conducted a national choice experiment survey to estimate non-market benefits of the afforestation program, compared to an alternative program of recovering pastures and the status quo of natural reforestation. Combining the preference data with secondary data on costs, we derive the social net return on land use alternatives. We find that restoring half of the abandoned pastures for grazing yields the highest net present value. Rural households closer to abandoned pastures are the largest beneficiaries of this policy due to the value they place on pastures and their disutility of natural reforestation. Their willingness to pay (WTP) for recovering pastures is more than three times that of urban households, while non-use values derived from carbon sequestration and biodiversity seem more constant across space. The net present value of all land use alternatives are still positive when limiting the aggregation of WTP to rural households, and when allowing for the presence of substantial hypothetical bias in benefit estimates and for cost increases. Results indicate that landscape and biodiversity values are substantial and should be considered when designing agricultural and climate policies.
    Keywords: climate forest; biodiversity; pastures; discrete choice experiment; nonuse values; costbenefit analysis
    JEL: Q18 Q15 Q51 Q54 Q57
    Date: 2019–09
  2. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Kataria, Mitesh (Department of Economics, School of Business, Economics and Law, Göteborg University); Lampi, Elina (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Households’ demand for electricity continues to increase. This trend per se should indicate increased disutility from power outages. On the other hand, batteries and other back-up systems have been improved and the frequency and duration of outages have been reduced in many countries. By comparing the results from two stated preference studies on Swedish households’ willingness to pay to avoid power outages in 2004 and 2017, we investigate whether the willingness to pay has changed. The willingness to pay is assessed for power outages of different durations, and whether it is planned or unplanned. We find three main differences: i) The proportion of households stating zero willingness to pay to avoid power outages decreased significantly from 2004 to 2017 and ii) the overall WTP was considerably higher in 2017 than in 2014, but iii) the WTP for duration of an outage has decreased. These results have implications for how regulators incentivize and regulate electricity suppliers since they suggest that a reliable supply of electricity is of greater importance now than what earlier studies have suggested.
    Keywords: Power outage; stated preferences; Sweden
    JEL: D12 Q40 Q41
    Date: 2019–10
  3. By: Ryan Hawthrone; Lukasz Grzybowksi
    Abstract: We test for the distributional effects of regulation and entry in the mobile telecommunications sector in a highly unequal country, South Africa. Using six waves of a consumer survey of over 134,000 individuals between 2009-2014, we estimate a discrete-choice model allowing for individual-specific price-responsiveness and preferences for network operators. Next, we use a demand and supply equilibrium framework to simulate prices and the distribution of welfare without entry and mobile termination rate regulation. We find that regulation benefits consumers significantly more than entry does, and that high-income consumers and city-dwellers benefit more in terms of increased consumer surplus.
    Keywords: Mobile telecommunications, Competition; Entry, Discrete choice, inequality
    JEL: L13 L40 L50 L96
    Date: 2019–08
  4. By: Nicolas Jacquemet (PSE - Paris School of Economics); Stéphane Luchini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Antoine Malezieux; Jason Shogren (UW - University of Wyoming)
    Abstract: Why do people pay taxes? Rational choice theory has fallen short in answering this question. Another explanation, called "tax morale", has been promoted. Tax morale captures the behavioral idea that non-monetary preferences (like norm-submission, moral emotions and moral judgments) might be better determinants of tax compliance than monetary trade-offs. Herein we report on two lab experiments designed to assess whether norm-submission, moral emotions (e.g. affective empathy, cognitive empathy, propensity to feel guilt and shame) or moral judgments (e.g. ethics principles, integrity, and moralization of everyday life) can help explain compliance behavior. Although we find statistically significant correlations of tax compliance behavior with empathy and shame, the economic significance of these correlations are low–—more than 80% of the variability in compliance remains unexplained. These results suggest that tax authorities should focus on the institutional context, rather than individual preference characteristics, to handle tax evasion.
    Keywords: tax evasion,tax morale,morality,personality traits,psychometrics
    Date: 2019–06–26
  5. By: Love Odion Idahosa; Tembi Maloney Tichaawa
    Abstract: This study adapts Herzberg's two-factor theory to investigate the satisfaction levels of attendees at the 2016 Festival of Arts and Culture (FESTAC) held in Cameroon. Specifically, it investigates how satisfaction is influenced by a-priori motivations for attending the event, which, in turn, affects revisit intentions. Using survey data collected from 324 participants at the festival, the study findings confirm the applicability of the Herzberg theory in evaluating the relationship between participants' motivation factors and their satisfaction levels. Satisfaction levels were also found to significantly influence return intentions. Results also emphasise the moderating effect of expenditure considerations on the attendees' satisfaction levels. These findings have implications for event planners and festival organisers as it highlights the superiority of unique festival `motivators' in predicting satisfaction levels, suggesting that event planners focus on these characteristics if they intend to increase attendees' satisfaction. The study is the first of its kind to apply Herzberg's theory to evaluating the relationship between motivation factors and satisfaction in a festival context. It is also the first West African contribution to the literature on the impact of event motivation on satisfaction levels and return intentions. The adoption of the Ordinal Logit Methodology is unique to this strand of literature.
    Keywords: Motivation, Satisfaction, Festival Attendees, Ordered Logit Model, Cameroon
    Date: 2019–10
  6. By: Herbert Ntuli; Edwin Muchapondwa; Boscow Okumu
    Abstract: Wildlife is widely becoming an important vehicle for rural development in most third-world countries across the globe. Policymakers are usually not informed about the needs and wants of poor rural households and roll out programmes that are not tailor made to suit their desires, which often result in policy failure. We use a survey-based choice experiment in this paper to investigate household preferences for various attributes of a wildlife management scheme. The survey was administered in CAMPFIRE communities around the Gonarezhou National Park in Zimbabwe. Respondents showed great willingness to move from the status quo to a regime that gives them full control over wildlife. Thus, our results speak to increased devolution of wildlife management from the rural district councils into the hands of sub-district producer communities. The WTP for the new regime is more than twice the WTP for the old regime. Furthermore, our results support the idea that government programmes and development projects should not be imposed on local communities, but should be informed by programme beneficiaries through research in order to capture their needs and wants. Finally, our results demonstrate that poachers and those who are generally good in extracting resources from the environment will oppose change.
    Keywords: willingness-to-pay, CAMPFIRE, local communities, wildlife conservation
    JEL: Q28 Q56 Q57 Q58
    Date: 2018–10
  7. By: Ryan Hawthrone; Lukasz Grzybowksi
    Abstract: We study substitution between fixed and mobile broadband services in South Africa using survey data on 134,000 individuals between 2009 and 2014. In our discrete-choice model, individuals choose fixed or mobile and data services in a framework that allows them to be substitutes or complements. We find that voice services are complements on average but data services are substitutes. However, many consumers see data services as complements. Our results show that having a computer and access to an internet connection at work or school are more important that reducing mobile data prices by 10% in driving broadband penetration.
    Keywords: Fixed-To-Mobile Substitution, Mobile Broadband, Fixed Broadband
    JEL: L13 L43 L96
    Date: 2019–09
  8. By: Shakeeb Khan (Boston College); Arnaud Maurel (Duke University); Yichong Zhang (Singapore Management University)
    Abstract: We study the informational content of factor structures in discrete triangular systems. Factor structures have been employed in a variety of settings in cross sectional and panel data models, and in this paper we formally quantify their identifying power in a bivariate system often employed in the treatment effects literature. Our main findings are that imposing a factor structure yields point identification of parameters of interest, such as the coefficient associated with the endogenous regressor in the outcome equation, under weaker assumptions than usually required in these systems. In particular, we show that an exclusion restriction, requiring an explanatory variable in the outcome equation to be excluded from the treatment equation, is no longer necessary for identification. Under such settings, we propose a rank estimator for both the factor loading and the causal effect parameter that are root-n consistent and asymptotically normal. The estimator’s finite sample properties are evaluated through a simulation study. We also establish identification results in models with more general factor structures, that are characterized by nonparametric functional forms and multiple idiosyncratic shocks.
    Keywords: Factor Structures, Discrete Choice, Causal Effects
    Date: 2019–09–15
  9. By: Elisa Salvador (ESSCA - Groupe ESSCA); Jean-Paul Simon; Pierre-Jean Benghozi (PREG-CRG - Pole de recherche en économie et gestion - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)
    Date: 2019
  10. By: Raphaël Soubeyran (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: In this paper, I study the design of least cost technology adoption subsidy schemes when the individuals' decisions are affected by peer effects and pro-social motivations. I show that pro-social preferences lead to lower individual subsidies whether peer effects are positive or negative. However, the form of the optimal scheme strongly depends on the type of peer effects. When peer effects are positive pro-social preferences lead to an increase in objective inequality -the difference between individual material payoffs- while they lead to a decrease in subjective inequality -the difference between individual utility levels. When peer effects are negative, the optimal subsidy scheme is uniform, that is all the individuals receive the same subsidy. The model delivers insights for the design of a large range of intervention programs supporting the adoption of new technologies, both in contexts where peer effects are positive (as has been shown in the case of malaria prevention technologies and modern agricultural inputs) and in contexts where peer effects are negative (as has been shown in the case of deworming pills).
    Keywords: pro-social preferences.,incentives,inequality,externality,principal,agents
    Date: 2019
  11. By: van Dalen, Harry (Tilburg University, School of Economics and Management); Henkens, C.J.I.M. (Tilburg University, School of Economics and Management); de Beer, J.
    Date: 2019
  12. By: Naoki Awaya (Graduate School of Economics, The University of Tokyo); Yasuhiro Omori (Faculty of Economics, The University of Tokyo)
    Abstract: An efficient simulation-based methodology is proposed for the rolling window esti- mation of state space models. Using the framework of the conditional sequential Monte Carlo update in the particle Markov chain Monte Carlo estimation, weighted particles are updated to learn and forget the information of new and old observations by the forward and backward block sampling with the particle simulation smoother. These particles are also propagated by the MCMC update step. Theoretical justifications are provided for the proposed estimation methodology. The computational performance is evaluated in illustrative examples, showing that the posterior distributions of model parameters and marginal likelihoods are estimated with accuracy. Finally, as a special case, our proposed method can be used as a new sequential MCMC based on Particle Gibbs, which is the promising alternative to SMC2 based on Particle MH.
    Date: 2019–01
  13. By: Samuel Shye; Ido Haber
    Abstract: Challenge Theory (CT), a new approach to decision under risk departs significantly from expected utility, and is based on firmly psychological, rather than economic, assumptions. The paper demonstrates that a purely cognitive-psychological paradigm for decision under risk can yield excellent predictions, comparable to those attained by more complex economic or psychological models that remain attached to conventional economic constructs and assumptions. The study presents a new model for predicting the popularity of choices made in binary risk problems. A CT-based regression model is tested on data gathered from 126 respondents who indicated their preferences with respect to 44 choice problems. Results support CT's central hypothesis, strongly associating between the Challenge Index (CI) attributable to every binary risk problem, and the observed popularity of the bold prospect in that problem (with r=-0.92 and r=-0.93 for gains and for losses, respectively). The novelty of the CT perspective as a new paradigm is illuminated by its simple, single-index (CI) representation of psychological effects proposed by Prospect Theory for describing choice behavior (certainty effect, reflection effect, overweighting small probabilities and loss aversion).
    Date: 2019–10
  14. By: George J. Mailath (University of Pennsylvania); Larry Samuelson (Yale University)
    Abstract: People reason with incomplete models. How do people hampered by different, incomplete views learn from each other? We introduce a model of ``model-based inference.'' Model-based reasoners partition an otherwise hopelessly complex state space into a manageable model. Unless the differences in agents' models are trivial, interactions will often not lead agents to common beliefs, and the correct-model belief will typically lie outside the convex hull of the agents' beliefs. However, if the agents' models have enough in common, then interacting will lead agents to similar beliefs, even if their models also exhibit bizarre idiosyncrasies and their information is widely dispersed.
    Keywords: Information aggregation, model-based reasoning
    JEL: D8
    Date: 2019–09–30

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