nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2022‒07‒18
ten papers chosen by
Edoardo Marcucci
Università degli studi Roma Tre

  1. Discrete-Choice Models and Representative Consumer Theory By Jean-Pierre H. Dubé; Joonhwi Joo; Kyeongbae Kim
  2. Identification and Estimation of Multinomial Choice Models with Latent Special Covariates By Nail Kashaev
  3. Agroforestry Adoption in the Face of Regional Weather Extremes By Stetter, Christian; Sauer, Johannes
  4. A Random Attention and Utility Model By Nail Kashaev; Victor H. Aguiar
  5. Payments for environmental services with provision thresholds: farmers’ preferences for a conditional bonus By Le Gloux, Fanny; Dupraz, Pierre; Issanchou, Alice; Ropars-Collet, Carole
  6. Estimation of Parametric Binary Outcome Models with Degenerate Pure Choice-Based Data with Application to COVID-19-Positive Tests from British Columbia By Nail Kashaev
  7. Car-Sharing Subscription Preferences: The Case of Copenhagen, Munich, and Tel Aviv-Yafo By Mayara Moraes Monteiro; Carlos M. Lima Azevedo; Maria Kamargianni; Yoram Shiftan; Ayelet Gal-Tzur; Sharon Shoshany Tavory; Constantinos Antoniou; Guido Cantelmo
  8. Potential social value from data: an application of discrete choice analysis By Diane Coyle; Annabel Manley
  9. Do decision makers have subjective probabilities? An experimental test By David Ronayne; Roberto Veneziani; William R. Zame
  10. Estimating Discrete Games with Many Firms and Many Decisions: An Application to Merger and Product Variety By Ying Fan; Chenyu Yang

  1. By: Jean-Pierre H. Dubé; Joonhwi Joo; Kyeongbae Kim
    Abstract: We establish the Hurwicz-Uzawa integrability of the broad class of discrete-choice additive random-utility models of individual consumer behavior with perfect substitutes preferences and divisible goods. We derive the corresponding indirect uility function and then establish a representative consumer formulation for this entire class of models. The representative consumer is always normative, facilitating aggregate welfare analysis. These findings should be of interest to the literatures in macro, trade, industrial organization, labor and ideal price index measurement that use representative consumer models, such as CES and its variants. Our results generalize such representative consumer formulations to the broad, empirically-relevant class of models of behavior that are routinely used in the discrete-choice analysis of micro data, including specifications that do not suffer from the IIA property and that allow for heterogeneous consumer preferences and incomes. When products are indivisible, we show that Hurwicz-Uzawa integrability fails; although some model variants might satisfy a stronger version of quasi-linear integrability.
    JEL: C43 D01 D11 D60 E1 L00 M3
    Date: 2022–06
  2. By: Nail Kashaev (University of Western Ontario)
    Abstract: Identification of multinomial choice models is often established by using special covariates that have full support. This paper shows how these identification results can be extended to a large class of multinomial choice models when all covariates are bounded. I also provide a new √n-consistent asymptotically normal estimator of the finite-dimensional parameters of the model.
    Keywords: Multinomial Choice, Random Coefficients, Special Covariate, Identification at Infinity, Bundles
    JEL: C50 C57
    Date: 2022
  3. By: Stetter, Christian; Sauer, Johannes
    Abstract: The cultivation of agroforestry systems is regarded as an effective strategy to synergistically mitigate and adapt to climate change in the face of an increased occurrence of regional extreme weather events. This study addresses the question if and under what conditions farmers are likely to adopt agroforestry and wood-based land-use systems in response to regional weather extremes. We conducted a discrete choice experiment to elicit farmers preferences for - and willingness to adopt - agroforestry and wood-based land use systems and combined the results with geo-spatial weather data. Assuming adaptive weather expectations, we regionally simulate land users' dynamic response to extreme weather years in terms of adoption probabilities. We find that farmers in our case study region in Southeast Germany have a negative preference for alley cropping and short rotation coppice compared to an exclusively crop-based land use system. However, the results from the simulation of a 2018-like extreme weather year show that alley-cropping systems (i.e. agroforestry) might have a very high probability of being adopted in the medium to long-run under different scenarios, thus enhancing farmers' resilience to climate change.
    Keywords: Environmental Economics and Policy, Production Economics
    Date: 2022–04
  4. By: Nail Kashaev (University of Western Ontario); Victor H. Aguiar (University of Western Ontario)
    Abstract: We generalize the stochastic revealed preference methodology of McFadden and Richter (1990) for finite choice sets to settings with limited consideration. Our approach is nonparametric and requires partial choice set variation. We impose a monotonicity condition on attention first proposed by Cattaneo et al. (2020) and a stability condition on the marginal distribution of preferences. Our framework is amenable to statistical testing. These new restrictions extend widely known parametric models of consideration with heterogeneous preferences.
    Keywords: Random Utility, Random Consideration Sets
    JEL: C50 C51 C52 C91
    Date: 2022
  5. By: Le Gloux, Fanny; Dupraz, Pierre; Issanchou, Alice; Ropars-Collet, Carole
    Abstract: The effectiveness of payment schemes for delivering agri-environmental public goods with provision thresholds (biodiversity, water quality) depends on reaching enough farmland enrolment at the landscape scale. Supporting the development of collaborative approaches with a financial bonus conditioned to a collective element on top of an individual basic payment is a promising way to favour participation and continuity of environmental commitments in an area. However, little is known on farmers’ attitudes towards such mixed-payment mechanisms. Using a choice experiment, we measure farmers’ preferences towards an individual bonus for sponsoring peers, which can be combined with a collective bonus for improving the ecological quality of rivers in northwestern France. Applying a mixed logit model, we find that respondents have a positive willingness to accept contracts with a sponsor bonus, but a negative willingness to accept a sponsor bonus combined with a bonus for reaching a collective environmental objective. We characterize respondents’ heterogeneity with a latent class model and identify 3 different attitudes towards the bonus options: (i) negative preferences for both, particularly for the combined bonus, (ii) indifference, (iii) positive preferences for both, even higher for the combined bonus.
    Keywords: Agricultural and Food Policy, Agricultural Finance, Environmental Economics and Policy
    Date: 2022–04
  6. By: Nail Kashaev (University of Western Ontario)
    Abstract: I propose a generalized method of moments type procedure to estimate parametric binary choice models when the researcher only observes degenerate pure choices-based or presence-only data and has some information about the distribution of the covariates. This auxiliary information comes in the form of moments. I present an application based on the data on all COVID-19-positive tests from British Columbia. Publicly available demographic information on the population in British Columbia allows me to estimate the conditional probability of a person being COVID-19-positively tested conditional on demographics.
    Keywords: Pure Choice-Based Data, Presence-Only Data, Data Combination, Missing Data, Epidemiology, Novel Coronavirus
    JEL: C2 C81 I19
    Date: 2022
  7. By: Mayara Moraes Monteiro; Carlos M. Lima Azevedo; Maria Kamargianni; Yoram Shiftan; Ayelet Gal-Tzur; Sharon Shoshany Tavory; Constantinos Antoniou; Guido Cantelmo
    Abstract: Car-sharing services have been providing short-term car access to their users, contributing to sustainable urban mobility and generating positive societal and often environmental impacts. As car-sharing business models vary, it is important to understand what features drive the attraction and retention of its members in different contexts. For that, it is essential to examine individuals preferences for subscriptions to different business models and what they perceive as most relevant, as well as understand what could be attractive incentives. This study aims precisely to examine individuals preferences for the subscription of different car-sharing services in different cities. We designed a stated preference experiment and collected data from three different urban car-sharing settings, namely Copenhagen, Munich, and Tel Aviv-Yafo. Then a mixed logit model was estimated to uncover car-sharing plan subscription and incentives preferences. The results improve our understanding of how both the features of the car-sharing business model and the provision of incentives can maintain and attract members to the system. The achieved insights pave the road for the actual design of car-sharing business models and incentives that can be offered by existing and future car-sharing companies in the studied or similar cities.
    Date: 2022–06
  8. By: Diane Coyle; Annabel Manley
    Abstract: There is great interest in understanding the value of data. However, its non-rivalry and externalities imply that private markets and market prices (if they exist) will not reflect social value. What's more, the value of any given data depends on the uses to which it can be put. This paper applies a form of discrete choice analysis widely used in marketing to elicit users' preferences and the marginal value of data. Given the widely-acknowledged importance of data in the economy, public data sets are an important part of the national economic infrastructure, we selected a prominent open data set. The method delivers estimates that could be used by public bodies for purposes such as estimating the social return to the data they provide or setting prices for 'freemium' access in cases where they are required to recover some of their costs.
    Keywords: data, discrete choice, non-rival, social welfare
    JEL: C80 C83 D83 O30
    Date: 2021–12
  9. By: David Ronayne (ESMT European School of Management and Technology GmbH); Roberto Veneziani (Queen Mary University of London); William R. Zame (University of California at Los Angeles)
    Abstract: Anscombe & Aumann (1963) offer a definition of subjective probability in terms of comparisons with objective probabilities. That definition - which has provided the basis for much of the succeeding work on subjective probability - presumes that the subjective probability of an event is independent of the prize consequences of that event, a property we term Prize Independence. We design experiments to test Prize Independence and find that a large fraction of our subjects violate it; thus, they do not have subjective probabilities. These findings raise questions about the empirical relevance of much of the literature on subjective probability.
    Keywords: subjective probability, choice under uncertainty, online experiments
    JEL: D01 D81 D84
    Date: 2022–06–21
  10. By: Ying Fan; Chenyu Yang
    Abstract: This paper presents a new method for estimating discrete games based on bounds of conditional choice probabilities. The method does not require solving the game and is scalable to models with many firms and many discrete decisions. We apply the method to study merger effects on firm entry and product variety in the retail craft beer market in California. We simulate an acquisition of multiple craft breweries by a large brewery and find that the acquisition would induce firm entry and product entry by non-merging firms. However, these changes are insufficient to offset the negative welfare effects resulting from the higher prices and decreased product offerings by the merging firms.
    JEL: D43 L13 L41 L66
    Date: 2022–06

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.