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on Discrete Choice Models |
| By: | Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); Wojciech Zawadzki (University of Warsaw, Faculty of Economic Sciences); Grzegorz Bernatek (bAudytel S.A.); Maciej Sobolewski (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | In this study, we explore the dynamics of consumer choices in the Polish telecommunications market, focusing on preferences and valuations for home fixed, home mobile, and purely mobile internet connections. Key attributes such as speed, latency, data limits, and cost are examined. Central to our research is the investigation of how the integration of 5G technology might influence demand elasticity. Using a detailed discrete choice experiment, we apply a mixed logit model with random parameters to analyze stated choice data, enabling us to unravel the complexities of demand elasticity, especially in terms of own- and cross-price elasticities. This approach facilitates an assessment of the degree of substitutability between fixed and mobile internet services. Our findings indicate a moderate substitution effect between fixed and mobile internet services. Results from a Small but Significant and Non-transitory Increase in Price (SSNIP) test suggest that these markets should continue to be regulated separately, mirroring the distinct regulation observed in fixed and mobile telephony. Furthermore, simulations provide insights into potential future market shifts with the advent of 5G services. This paper contributes significantly to the discourse on fixed-mobile internet substitution and offers vital insights for defining markets in antitrust discussions, competitive agreements, and potential mergers within the telecom sector. |
| Keywords: | Fixed-Mobile Internet Substitution, Consumer Preferences in Telecommunications, Mobile Broadband Access, Home Internet Connectivity, Discrete Choice Analysis, 5G Network Impact, Demand Elasticity in Internet Services, Stated Preference Methodology, Telecommunications Market Analysis, Price Elasticity in Internet Access |
| JEL: | L96 D12 C25 L51 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2024-15 |
| By: | Jean-Michel Benkert, Shuo Liu, Nick Netzer |
| Abstract: | Response times contain information about economically relevant but unobserved variables like willingness to pay, preference intensity, quality, or happiness. Here, we provide a general characterization of the properties of latent variables that can be detected using response time data. Our characterization generalizes various results in the literature, helps to solve identification problems of binary response models, and paves the way for many new applications. We apply the result to test the hypothesis that marginal happiness is decreasing in income, a principle that is commonly accepted but so far not established empirically. |
| Keywords: | response times, chronometric effect, binary response model, non-parametric identification, decreasing marginal happiness |
| JEL: | C14 D60 D91 I31 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ube:dpvwib:dp2407 |
| By: | Matthew T. Cole (Department of Economics, California Polytechnic State University) |
| Abstract: | A tip is a voluntary payment above the sticker price to a service provider. Tipping is inherently price discrimination as different customers pay different effective prices. In this paper, I ask, what are the welfare effects from a model with price discrimination in which consumers subsidize labor costs to one in which all consumers pay the same price but workers are paid a higher wage. Holding firm profits fixed across the two regimes and assuming consumers whose willingness to pay is higher also tip more, I find that the consumer that has the highest (lowest) willingness to pay unambiguously gains (loses) from moving to a fair wage regime. Furthermore, if the wage rate increases such that firm profits remain the same, total social surplus increases but workers are worse off relative to the tipping regime. Finally, if the two groups of consumers are sufficiently different in their willingness to pay and the wage rate increases such that the worker is indifferent, total social surplus would be higher in the tipping regime. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cpl:wpaper:2401 |
| By: | Peter Arcidiacono; Karthik Muralidharan; John D. Singleton |
| Abstract: | We leverage a unique two-stage experiment that randomized access to private school vouchers across markets as well as students to estimate the revealed preference value of school choice. To do this, we estimate several choice models on data only from control markets before turning to the treatment data for model validation. This exercise reveals that a model where school choice is constrained by ability-to-pay achieves better out-of-sample fit but still underpredicts experimental take-up of the voucher offer. We then present evidence from treatment markets that: a) the voucher offer also induced search; and b) private schools used program surplus to incentivize enrollment. Further, we show that a unified model incorporating these features can explain both the control and treatment data patterns. Estimates from that model imply that a targeted voucher program would have a marginal value of public funds (MVPF) of at least 3. |
| JEL: | H4 I20 O12 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32968 |
| By: | Rios-Avila, Fernando (Levy Economics Institute); Siles, Leonardo (Universidad de Chile); Canavire Bacarreza, Gustavo J. (World Bank) |
| Abstract: | This paper proposes a new method to estimate quantile regressions with multiple fixed effects. The method, which expands on the strategy proposed by Machado and Santos Silva (2019), allows for the inclusion of multiple fixed effects and provides various alternatives for estimating standard errors. We provide Monte Carlo simulations to show the finite sample properties of the proposed method in the presence of two sets of fixed effects. Finally, we apply the proposed method to two different examples using macroeconomic and microeconomic data and allowing for multiple fixed effects with robust results. |
| Keywords: | fixed effects, linear heteroskedasticity, location-scale model |
| JEL: | C21 C22 C23 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17262 |
| By: | Ellis, Andrew; Freeman, David J. |
| Abstract: | Experiments suggest that people fail to take into account interdependencies between their choices—they do not broadly bracket. Researchers often instead assume people narrowly bracket, but existing designs do not test it. We design a novel experiment and revealed preference tests for how someone brackets their choices. In portfolio allocation under risk, social allocation, and induced-value shopping experiments, 40–43 percent of subjects are consistent with narrow bracketing, and 0–16 percent with broad bracketing. Adjusting for each model's predictive precision, 74 percent of subjects are best described by narrow bracketing, 13 percent by broad bracketing, and 6 percent by intermediate cases. |
| Keywords: | AAM requested |
| JEL: | D12 D81 D91 |
| Date: | 2024–09–20 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:125470 |
| By: | Xinyao Kong; Jean-Pierre H. Dubé; Øystein Daljord |
| Abstract: | We study habitual brand loyalty, one of the earliest empirically-studied forms of switching costs and a classic source of structural state-dependence in consumer demand. Auxiliary instruments and economically-motivated restrictions can tighten nonparametric bounds on the extent of brand loyalty in choice panel data. We also prove that the canonical dynamic discrete-choice model, nested in our nonparametric framework, has “built-in” exclusion restrictions that semiparametrically identify the discount factor, in general, and point identify it for standard parameterizations of switching costs. Case studies of several large consumer goods categories show that brand loyalty accounts for at least 10.8% but no more than 72.2% of the observed choices across categories studied. In some categories, it accounts for over 90% of observed repeat-purchase behavior. Consumers are found to be forward-looking, but more impatient than would be implied by the real rate of interest. |
| JEL: | D11 D12 L66 M3 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32994 |
| By: | Dimitri Laroutis (CARE - Centre d'Analyse et de Recherche en Économie - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, LECOR - Laboratoire d'Economie Rurale - ESITPA - École supérieure d'ingénieurs et de techniciens pour l'agriculture, Métis Lab EM Normandie - EM Normandie - École de Management de Normandie); Philippe Boistel (CERM - Centre de recherche en Risk Management); Max Poulain (NIMEC - Normandie Innovation Marché Entreprise Consommation - UNICAEN - Université de Caen Normandie - NU - Normandie Université - ULH - Université Le Havre Normandie - NU - Normandie Université - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université) |
| Abstract: | With 350 million product references, Amazon is a global e-commerce company which remains omnipresent in a wide range of sectors. We wanted to identify the factors that explain the choice of econsumers in their buying process. Why do they choose Amazon over another commercial site? How can SMEs improve their differentiation against competition from Amazon? Based on a survey conducted among 191 Internet shoppers, we were able to build a model explaining the choice of e-consumers regarding their preferences in terms of consuming online. We thus identified 14 significant variables explaining the behaviour of an e-consumer in his choice of an online commercial site, with influences ranging from -30.38% to +41.5% in the propensity of individuals to choose Amazon. |
| Abstract: | Avec 350 millions de références produit, Amazon constitue une entreprise globale de e-commerce, omniprésente dans un nombre de secteurs incalculable. Nous avons souhaité identifier les facteurs explicatifs du choix des e-consommateurs dans leur démarche d'achat. Pourquoi choisissent-ils Amazon plutôt qu'un autre site marchand ? Comment les PME peuvent elles se différencier pour riposter à Amazon ? Sur la base d'une enquête réalisée auprès de 191 internautes acheteurs, nous avons construit un modèle explicatif du choix des e-consommateurs par rapport à leur site marchand de référence. 14 variables expliquant le comportement du e-consommateur dans son choix de site marchand se sont révélées significatives, avec des influences allant de -30.38% à +41.5% dans la propension des individus à choisir Amazon |
| Keywords: | Digital strategy, Consumer behaviour, Amazon, Stratégie digitale, Comportement du consommateur |
| Date: | 2024–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04687303 |