nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2021‒11‒22
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Farmers’ Willingness to Pay for Digital Credit: Evidence from a Discrete Choice Experiment in Madagascar By Sarfo, Yaw; Musshoff, Oliver; Weber, Ron; Danne, Michael
  2. Urban Consumers’ Preferences and Willingness to Pay for Orphan Crop Products: Evidence from a Choice Experiment on Porridge in Kenya By Akaichi, Faical; Ciera, Nichola; Revoredo-Giha, Cesar
  3. Mission of the Company, Prosocial Attitudes and Job Preferences: A Discrete Choice Experiment By Non, Arjan; Rohde, Ingrid M.T.; de Grip, Andries; Dohmen, Thomas
  4. Incorporating Search and Sales Information in Demand Estimation By Ali Hortacsu; Olivia R. Natan; Hayden Parsley; Timothy Schwieg; Kevin R. Williams
  5. An Empirical Model of Quantity Discounts with Large Choice Sets By Alessandro Iaria,; Wang, Ao
  6. Accounting for subsistence needs in non-market valuation: A simple proposal By Victor Champonnois; Olivier Chanel

  1. By: Sarfo, Yaw; Musshoff, Oliver; Weber, Ron; Danne, Michael
    Keywords: Farm Management
    Date: 2021–08
  2. By: Akaichi, Faical; Ciera, Nichola; Revoredo-Giha, Cesar
    Keywords: Consumer/Household Economics
    Date: 2021–08
  3. By: Non, Arjan (Erasmus University Rotterdam); Rohde, Ingrid M.T. (Istanbul Bilgi University); de Grip, Andries (ROA, Maastricht University); Dohmen, Thomas (University of Bonn and IZA)
    Abstract: We conduct a discrete choice experiment to investigate how the mission of high-tech companies affects job attractiveness and contributes to self-selection of science and engineering graduates who differ in prosocial attitudes. We characterize mission by whether or not the company combines its profit motive with a mission on innovation or corporate social responsibility (CSR). Furthermore, we vary job design (e.g. autonomy) and contractible job attributes (e.g. job security). We find that companies with a mission on innovation or CSR are considered more attractive. Women and individuals who are more altruistic and less competitive feel particularly attracted to such companies.
    Keywords: mission of the company, sorting, discrete choice experiment, job characteristics, social preferences
    JEL: J81 J82 M52
    Date: 2021–11
  4. By: Ali Hortacsu (University of Chicago and NBER); Olivia R. Natan (University of California, Berkeley); Hayden Parsley (University of Texas, Austin); Timothy Schwieg (University of Chicago, Booth); Kevin R. Williams (Cowles Foundation, Yale University)
    Abstract: We propose an approach to modeling and estimating discrete choice demand that allows for a large number of zero sale observations, rich unobserved heterogeneity, and endogenous prices. We do so by modeling small market sizes through Poisson arrivals. Each of these arriving consumers then solves a standard discrete choice problem. We present a Bayesian IV estimation approach that addresses sampling error in product shares and scales well to rich data environments. The data requirements are traditional market-level data and measures of consumer search intensity. After presenting simulation studies, we consider an empirical application of air travel demand where product-level sales are sparse. We ï¬ nd considerable variation in demand over time. Periods of peak demand feature both larger market sizes and consumers with higher willingness to pay. This ampliï¬ es cyclicality. However, observed frequent price and capacity adjustments offset some of this compounding effect.
    Keywords: Discrete Choice Modeling, Demand Estimation, Zeros, Bayesian Methods, Cyclical Demand, Airline Markets
    JEL: C10 C11 C13 C18 L93
    Date: 2021–11
  5. By: Alessandro Iaria, (University of Bristol and CEPR); Wang, Ao (University of Warwick)
    Abstract: We introduce a Generalized Nested Logit model of demand for bundles that can be estimated sequentially and virtually eliminates any challenge of dimensionality related to large choice sets. We use it to investigate quantity discounts for carbonated soft drinks by simulating a counterfactual with linear pricing. The prices of quantities up to 1L decrease by −31.5% while those of larger quantities increase by +14.8%. Purchased quantities decrease by −20.4%, associated added sugar by −23.8%, and industry profit by −20.5%. Consumer surplus however reduces only moderately, suggesting that linear pricing may be effective in limiting added sugar intake.
    Date: 2021
  6. By: Victor Champonnois (UMR G-EAU, Montpellier, France.); Olivier Chanel (Aix-Marseille Univ., CNRS, AMSE, Marseille, France.)
    Abstract: Revealed and stated preference techniques are widely used to assess willingness to pay (WTP) for non-market goods as input to public and private decision-making. However, individuals first have to satisfy subsistence needs through market good consumption, which affects their ability to pay. We provide a methodological framework and derive a simple ex post adjustment factor to account for this effect. We quantify its impacts on the WTP for non-market goods and the ranking of projects theoretically, numerically and empirically. This confirms that non-adjusted WTP tends to be plutocratic: the views of the richest-whatever they are-are more likely to impact decision-making, potentially leading to ranking reversal between projects. We also suggest that the subsistence needs-based adjustment factor we propose has a role to play in value transfer procedures. The overall goal is a better representation of the entire population's preferences with regard to non-market goods.
    Keywords: subsistence needs; adjustment factor; non-market valuation; value transfer; population's preferences
    JEL: D60 D70 Q51
    Date: 2021–11

This nep-dcm issue is ©2021 by Edoardo Marcucci. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.