nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒05‒23
nine papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Dynamic demand for differentiated products with fixed-effects unobserved heterogeneity By Victor Aguirregabiria
  2. Exploring the Consumer Market of Microtransit Services in the Sacramento Area, California By Xing, Yan; Pike, Susan; Pourrahmani, Elham; Handy, Susan; Wang, Yunshi
  3. Working from home during a pandemic – a discrete choice experiment in Poland By Piotr Lewandowski; Katarzyna Lipowska; Mateusz Smoter
  4. Tailored interventions in a major life decision: A home relocation discrete choice experiment By Velvart, Joëlle; Dato, Prudence; Kuhlmey, Florian
  5. A Markov Chain Monte Carlo procedure to generate revealed preference consistent datasets By Thomas Demuynck
  6. Willingness to pay, surplus and Insurance policy under dual theory By Neji Saidi
  7. Who is afraid of electric vehicles? An analysis of stated EV preferences in Switzerland By Jeremy van Dijk; Mehdi Farsi
  8. Deadweight Losses or Gains from In-kind Transfers? Experimental Evidence from India By Klaus Abbink; Gaurav Datt; Lata Gangadharan; Digvijay Negi; Bharat Ramaswami
  9. Semantics meets attractiveness: Choice by salience By Alfio Giarlotta; Angelo Petralia; Stephen Watson

  1. By: Victor Aguirregabiria
    Abstract: This paper studies identification and estimation of a dynamic discrete choice model of demand for differentiated product using consumer-level panel data with few purchase events per consumer (i.e., short panel). Consumers are forward-looking and their preferences incorporate two sources of dynamics: last choice dependence due to habits and switching costs, and duration dependence due to inventory, depreciation, or learning. A key distinguishing feature of the model is that consumer unobserved heterogeneity has a Fixed Effects (FE) structure -- that is, its probability distribution conditional on the initial values of endogenous state variables is unrestricted. I apply and extend recent results to establish the identification of all the structural parameters as long as the dataset includes four or more purchase events per household. The parameters can be estimated using a sufficient statistic - conditional maximum likelihood (CML) method. An attractive feature of CML in this model is that the sufficient statistic controls for the forward-looking value of the consumer's decision problem such that the method does not require solving dynamic programming problems or calculating expected present values.
    Keywords: Structural dynamic discrete choice models; Dynamic demand of differentiated products; Panel data; Fixed effects; Habits; Switching costs; Storable products; Durable products
    JEL: C23 C25 C51 D12
    Date: 2022–05–08
  2. By: Xing, Yan; Pike, Susan; Pourrahmani, Elham; Handy, Susan; Wang, Yunshi
    Abstract: Microtransit is an emerging, technology-enabled, on-demand transportation mode whereby small shuttles provide shared rides through flexible routing and scheduling in response to customers’ requests for rides. Given its potential to address the equity and accessibility needs of the public, public transportation agencies are experimenting with this service to fill gaps in traditional transportation in the US. However, why some people are interested in microtransit while others are not remains an open question. For people who have never used it, what factors could work as facilitators or barriers in their willingness to adopt microtransit? Who are the early adopters of microtransit? Guided by the theory of planned behavior, this study aims to fill the gap in knowledge by conducting a large-scale survey of microtransit adopters and users of other means of transportation in the Sacramento area of California in 2021. This study focuses on the microtransit service SmaRT Ride (SR), operated by the Sacramento Regional Transit District (SacRT). Focus groups and interviews were conducted before the largescale online survey to gather preliminary information, help develop survey questions, and improve understanding of research findings, given the novelty of microtransit. Discrete choice models, including binary logit and ordered logit models and latent class analysis, were employed to explore barriers to and facilitators of SR adoption, willingness to use it, and underlying subgroups of early adopters. Important findings include that people who like fixed-route transit are less likely to adopt microtransit. Social support plays an important role in explaining the willingness to use microtransit. The analysis reveals three salient classes of microtransit users: travel time savers with environmental awareness, riders with a neutral mindset, and pro-SR and travel cost savers. View the NCST Project Webpage
    Keywords: Social and Behavioral Sciences, Microtransit, theory of planned behavior, focus group, discrete modeling, latent class
    Date: 2022–05–01
  3. By: Piotr Lewandowski; Katarzyna Lipowska; Mateusz Smoter
    Abstract: The COVID-19 pandemic has transformed working from home from a rarity to a widely adopted job amenity. We study workers’ willingness to pay for working from home, and how it may be affected by subjective and objective assessments of COVID-19-related risks. We conducted a discrete choice experiment with more than 10,000 workers in Poland. We randomised wage differences between otherwise identical home- and office-based jobs. We also randomised an information provision treatment in which we informed 50% of workers about the level of exposure to contagion in their occupation, and how it may be reduced by working from home. We found that the demand for working from home was substantial – the majority of participants would prefer to work from home if they were offered the same wage for a home-based job as they would earn in an office-based job. On average, workers would sacrifice 5.1% of their earnings for the option to work from home, especially for 2-3 days a week (7.3%) rather than 5 days a week (2.8%). We also found that the perception of COVID-19 mattered, as workers who perceived it as a threat were willing to give up a much higher share of their earnings than those who did not. However, the willingness to pay did not differ significantly between individuals depending on whether their occupation had a high or a low level of exposure, or between individuals treated in the information experiment and those in the control group.
    Keywords: labour market, homeoffice, pandemic, others
    JEL: J21 J44
    Date: 2022–04
  4. By: Velvart, Joëlle (University of Basel); Dato, Prudence (University of Basel); Kuhlmey, Florian (University of Basel)
    Abstract: Major life decisions such as the choice of housing and its characteristics have significant implications for a household and its energy consumption because they alter structural aspects of energy demand. Energy policy interventions targeting these decisions can therefore have a long-lasting impact. To assess non-monetary policy instruments as incentives for energy-conserving housing choices we implement a discrete choice experiment with a representative sample of Swiss households. The purpose of this paper is the investigation of behavioural differences across households in reaction to social norms and energy-related information. To this end, we distinguish different types of households with a segmentation approach useful for policy makers. Our study provides insights for the question whether the tailoring of non-monetary measures can contribute to a more effective policy design compared to a one-size-fits-all approach. Estimating panel mixed logit models, we find treatment effects to significantly differ across household segments as well as with the baseline energy consumption. The evident treatment heterogeneity suggests a targeted approach for non-monetary interventions.
    Keywords: Housing choice, household heterogeneity, non-monetary incentives, social norms, energy literacy
    JEL: D1 D83 D9 Q4 Q5 R21
    Date: 2022–02–17
  5. By: Thomas Demuynck
    Date: 2021–08–01
  6. By: Neji Saidi
    Abstract: In this paper, we aims to state some proprieties of willingness to pay (WTP) for partial risk reduction and links with insurance within the dual theory of decision. In the case of partial reduction, we get as Langlais (2005) that a risk-averse decision maker (DM) can have a willingness to pay small than this of a neutral one. By decomposition the WTP as Courbage and al (2008), we get that a strong averse DM is willing to give more for a reduction of a high probability portion rather than a low probability one. The main result is that in the dual theory, reducing probability of risk and supply insurance can be complementary if the surplus is increasing in risk reduction.
    Date: 2022–04
  7. By: Jeremy van Dijk; Mehdi Farsi
    Abstract: We provide novel evidence for the size of key electric vehicle (EV) adoption barriers, purchase price and battery range, and the driver, operating cost, in the broadening EV market. We further demonstrate the heterogeneity of these across consumer segments, plus determine groups most resistant to EV adoption and the relationship with transport habits and car ownership. To this end we analyse the results of a choice experiment of 882 respondents across Switzerland, a market that has favourable adoption criteria, however realises a low EV market share. We find low and inelastic elasticities of price, range and driving cost, and high variation across levels of urbanisation, income and car ownership. We additionally see high technological preference inertia among car owners, and a larger probability of non-owners and public transport users to choose EVs. We finally propose targeting EV adoption policies to relatively sensitive consumer groups to maximise efficiency, and support alternative policies to overcome low overall elasticities and achieve greater effectiveness.
    Keywords: Transport; Electric vehicles; Adoption barriers; Choice experiment; Stated preferences; Environmental policy; Behaviour
    JEL: D90 O33 Q40 Q48 Q50 Q58 R40
    Date: 2022–05
  8. By: Klaus Abbink (Department of Economics, Monash University); Gaurav Datt (Centre for Development Economics and Sustainability, Monash University,); Lata Gangadharan (Department of Economics, Monash University); Digvijay Negi (Indira Gandhi Institute of Development Research, India); Bharat Ramaswami (Ashoka University, India.)
    Abstract: Are in-kind transfers associated with deadweight losses? To answer this, we conducted an incentivized field experiment in India, which offered low-income households the choice between a free quantity of rice and varying amounts of cash to elicit their willingness to pay for rice. Contrary to expectation, we find evidence of deadweight gain on average, though with a striking contrast between a deadweight loss among respondents from female-headed households and a deadweight gain among respondents from male-headed households. Our results highlight the role of gender differences in bargaining power in shaping the choice between cash or rice.
    Keywords: deadweight loss, in-kind transfer, cash transfer, food subsidy, field experiment
    JEL: C93 D13 I38 J16 Q18
    Date: 2022–05
  9. By: Alfio Giarlotta; Angelo Petralia; Stephen Watson
    Abstract: We describe a context-sensitive model of choice, in which the selection process is shaped not only by the attractiveness of items but also by their semantics ('salience'). All items are ranked according to a relation of salience, and a linear order is associated to each item. The selection of a single element from a menu is justified by one of the linear orders indexed by the most salient items in the menu. The general model provides a structured explanation for any observed behavior, and allows us to to model the 'moodiness' of a decision maker, which is typical of choices requiring as many distinct rationales as items. Asymptotically all choices are moody. We single out a model of linear salience, in which the salience order is transitive and complete, and characterize it by a behavioral property, called WARP(S). Choices rationalizable by linear salience can only exhibit non-conflicting violations of WARP. We also provide numerical estimates, which show the high selectivity of this testable model of bounded rationality.
    Date: 2022–04

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