nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒02‒21
six papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Semiparametric Bayesian Estimation of Discrete Choice Models By Andriy Norets; Kenichi Shimizu
  2. Exact time-dependent dynamics of discrete binary choice models By Holehouse, James; Moran, José
  3. Prospective welfare analysis: Extending willingness-to-pay assessment to embrace sustainability By Inderst, Roman; Thomas, Stefan
  4. Benefits and costs of EU marketing standards for agri-food products By RUSSO Carlo; SANSONE Marcello; COLAMATTEO Annarita; PAGNANELLI Maria Anna; TWUM Kyei Edward
  5. The Virtuous Cycle of Agreement By Philippos Louis; Matias Nunez; Dimitrios Xefteris
  6. An Essay on Labor Supply Decisions and Reference Dependent Preferences By Pramanik, Subhajit

  1. By: Andriy Norets; Kenichi Shimizu
    Abstract: We propose a tractable semiparametric estimation method for dynamic discrete choice models. The distribution of additive utility shocks is modeled by location-scale mixtures of extreme value distributions with varying numbers of mixture components. Our approach exploits the analytical tractability of extreme value distributions and the flexibility of the location-scale mixtures. We implement the Bayesian approach to inference using Hamiltonian Monte Carlo and an approximately optimal reversible jump algorithm from Norets (2021). For binary dynamic choice model, our approach delivers estimation results that are consistent with the previous literature. We also apply the proposed method to multinomial choice models, for which previous literature does not provide tractable estimation methods in general settings without distributional assumptions on the utility shocks. We develop theoretical results on approximations by location-scale mixtures in an appropriate distance and posterior concentration of the set identified utility parameters and the distribution of shocks in the model.
    Keywords: Dynamic Discrete choice, Bayesian nonparametrics, set identification, location-scale mixtures, MCMC, Hamiltonian Monte Carlo, reversible jump
    Date: 2022–02
  2. By: Holehouse, James; Moran, José
    Abstract: We provide a generic method to find full dynamical solutions to binary decision models with interactions. In these models, agents follow a stochastic evolution where they must choose between two possible choices by taking into account the choices of their peers. We illustrate our method by solving Kirman and Föllmer's ant recruitment model for any number N of agents and for any choice of parameters, recovering past results found in the limit N ! 1. We then solve extensions of the ant recruitment model for increasing asymmetry between the two choices. Finally, we provide an analytical time-dependent solution to the standard voter model and a semi-analytical solution to the vacillating voter model.
    Date: 2022–01
  3. By: Inderst, Roman; Thomas, Stefan
    Abstract: In this paper we outline how a future change in consumers' willingness-to-pay can be accounted for in a consumer welfare effects analysis in antitrust. Key to our solution is the prediction of preferences of new consumers and changing preferences of existing consumers in the future. The dimension of time is inextricably linked with that of sustainability. Taking into account the welfare of future cohorts of consumers, concerns for sustainability can therefore be integrated into the consumer welfare paradigm to a greater extent. As we argue in this paper, it is expedient to consider changes in consumers' willingness-to-pay, in particular if society undergoes profound changes in such preferences, e.g., caused by an increase in generally available information on environmental effects of consumption, and a rising societal awareness about how consumption can have irreversible impacts on the environment. We offer suggestions on how to conceptionalize and operationalize the projection of such consumers' changing preferences in a "prospective welfare analysis". This increases the scope of the consumer welfare paradigm and can help to solve conceptual issues regarding the integration of sustainability into antitrust enforcement while keeping consumer surplus as a quantitative gauge.
    Keywords: Antitrust,Consumer Welfare,Sustainability
    JEL: A13 K21 K32
    Date: 2022
  4. By: RUSSO Carlo; SANSONE Marcello; COLAMATTEO Annarita; PAGNANELLI Maria Anna; TWUM Kyei Edward
    Abstract: This Report summarizes the findings emerging from the online workshop on ‘Marketing Standards: Benefits and costs of EU marketing standards for agri-food products’ which was organized by the Directorate-General for Agriculture and Rural Development (DG-AGRI) and Joint Research Centre (JRC) on September 9th 2021. The discussion revolves around three main issues regarding the EU marketing standards: i) Do the benefits from current regulation exceed the costs? ii) What are the implications of EU regulations for international trade and producers? and iii) What are the possible effects of a change in regulation, updating EU marketing standards to promote a sustainable agrifood system and adjust to changes in consumer preferences and technology?
    Keywords: Marketing standards, food chain, EU regulation, European Green Deal, Farm to Fork Strategy
    Date: 2022–01
  5. By: Philippos Louis (UCY - University of Cyprus); Matias Nunez (CNRS - Centre National de la Recherche Scientifique); Dimitrios Xefteris (UCY - University of Cyprus)
    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 so, 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 decision mechanisms that promote consensual behaviour generate substantially higher levels of post-decision actual agreement compared to outcome-wise identical procedures that incentivize subjects to exaggerate their differences.
    Date: 2021–07–08
  6. By: Pramanik, Subhajit
    Abstract: This article presents a brief analysis of labor supply decision models using the concept of reference-dependent preference. This reference-dependent preference leads the model towards a behavioral aspect where “GainLoss utility” can be derived from standard “consumption utility” and the reference point is determined endogenously by the economic environment. At the first two sections of the article labor supply decision and reference-dependent preference has been discussed in a brief. Then three models has been discussed where the economists used the concept of reference-dependent preference to make labor supply model decisions.
    Keywords: Prospect Theory, Behavioral Economics, Labor Supply Decisions, Reference Dependent Preference.
    JEL: D01 D03 D7 D78 D81
    Date: 2021–12–02

This nep-dcm issue is ©2022 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.