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on Discrete Choice Models |
| By: | Hung Tran; Tien Mai; Minh Hoang Ha |
| Abstract: | The recursive logit (RL) model provides a flexible framework for modeling sequential decision-making in transportation and choice networks, with important applications in route choice analysis, multiple discrete choice problems, and activity-based travel demand modeling. Despite its versatility, estimation of the RL model typically relies on nested fixed-point (NFXP) algorithms that are computationally expensive and prone to numerical instability. We propose a new approach that reformulates the maximum likelihood estimation problem as an optimization problem with equilibrium constraints, where both the structural parameters and the value functions are treated as decision variables. We further show that this formulation can be equivalently transformed into a conic optimization problem with exponential cones, enabling efficient solution using modern conic solvers such as MOSEK. Experiments on synthetic and real-world datasets demonstrate that our convex reformulation achieves accuracy comparable to traditional methods while offering significant improvements in computational stability and efficiency, thereby providing a practical and scalable alternative for recursive logit model estimation. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.16886 |
| By: | Pouget, Sébastien; Brodback, Daniel; Guenster, Nadja; Wang, Ruichen |
| Abstract: | We present an experimental study of investors’ willingness to pay for socially responsible assets. In our initial public offering experiment, various assets share identical financial risk-return profiles but differ in the intensity and timing of societal benefits, represented by charitable donations. We find that subjects value societal benefits positively and prefer a positive correlation between financial returns and these societal benefits. We offer implications for the design of corporate social responsibility policies and for the pricing of responsible assets. |
| Keywords: | Socially Responsible Investing; Investment Decisions; ESG Preferences; Experimental Finance |
| JEL: | A13 C91 G41 |
| Date: | 2025–10–23 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131057 |
| By: | Blesse, Sebastian; Gruendler, Klaus; Heil, Philipp; Hermes, Henning |
| Abstract: | Economic narratives are pervasive in the public discourse and can shape individual behavior. But so far we know very little about whether households actually demand and value narratives as information. We combine a comprehensive expert survey with a large-scale nationally representative household sample in the U.S. to examine the demand for economic narratives in a high-stakes environment of an unprecedentedly high recession probability. We document a substantial willingness to pay for economic narratives of more than 4 USD, which is higher than for numerical forecast information. The dominant motives for acquiring narratives are intrinsic, but a smaller share of participants also lists instrumental motives. Economic narratives improve respondents' understanding of recession drivers and shape beliefs about the economy and spending, but exert only a minor impact on quantitative expectations. Our findings underscore the potential of narratives as a tool to improve economic understanding and to foster more informed decisionmaking. |
| Keywords: | Narratives, Experts, Information Acquisition, Willingness to Pay, Expectation Formation, Belief Formation, Spending Intentions, Recession |
| JEL: | D83 D84 D12 E32 E71 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:330323 |
| By: | Blesse, Sebastian (University of Leipzig); Gruendler, Klaus (University of Kassel); Heil, Philipp (ifo Institute, University of Munich); Hermes, Henning (Ifo Institute for Economic Research) |
| Abstract: | Economic narratives are pervasive in the public discourse and can shape individual behavior. But so far we know very little about whether households actually demand and value narratives as information. We combine a comprehensive expert survey with a large-scale nationally representative household sample in the U.S. to examine the demand for economic narratives in a high-stakes environment of an unprecedentedly high recession probability. We document a substantial willingness to pay for economic narratives of more than 4 USD, which is higher than for numerical forecast information. The dominant motives for acquiring narratives are intrinsic, but a smaller share of participants also lists instrumental motives. Economic narratives improve respondents’ understanding of recession drivers and shape beliefs about the economy and spending, but exert only a minor impact on quantitative expectations. Our findings underscore the potential of narratives as a tool to improve economic understanding and to foster more informed decision-making. |
| Keywords: | belief formation, expectation formation, willingness to pay, information acquisition, experts, narratives, spending intentions, recession |
| JEL: | D83 D84 D12 E32 E71 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18205 |
| By: | Toker Doganoglu (Department of Economics, University of Wuerzburg); Lukasz Grzybowski (Faculty of Economic Sciences, University of Warsaw); Frank Verboven (KU Leuven and CEPR (London), Naamsestraat 69, 3000 Leuven, Belgium) |
| Abstract: | This paper examines the impact of the 2021 revision of the EU energy labeling regulation on the energy efficiency of refrigerators sold in Belgium, France, Germany, and Poland between 2019 and 2022. We analyze detailed product-level sales data to assess whether the introduction of the new labeling system (the New EU Energy Label 2021) improved the energy performance of products available on the market. The results reveal substantial cross-country differences in sales-weighted energy consumption: Germany and Belgium exhibit significantly lower average energy use, reflecting differences in product portfolios and consumer preferences, while consumers in France and Poland tend to purchase less efficient models. After controlling for refrigerator characteristics, average energy consumption declined by 2.8% in France, 3.4% in Belgium, and 3.5% in both Germany and Poland between March 2021 and December 2022. We further estimate a nested logit demand model incorporating both energy labels and the discounted ten-year cost of electricity consumption. The results indicate that, except in Poland, consumers tend to undervalue future energy costs under both the old and new labeling regimes. The estimated willingness to pay (WTP) for labels varies across countries, with some evidence of overvaluation for specific efficiency classes. Using the model, we conduct counterfactual simulations to assess the effects of alternative policy scenarios. The simulations suggest that the 2021 reform led to measurable improvements in the average energy efficiency of refrigerators sold in the EU market. |
| Keywords: | Energy Efficiency, EU Energy Label, Nested Logit |
| JEL: | D12 L51 Q58 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2025-26 |
| By: | Hui-Kuan Chung; Nick Doren; Lasse Mononen; Mia Lu; Marcus Grueschow; Helen Hayward Könnecke; Alexander Jetter; Boris B. Quednow; Nick Netzer; Philippe N. Tobler |
| Abstract: | Models of limited attention have the potential to become a new unifying paradigm that could replace the rational choice approach. In this paper, we test the limited attention hypothesis by enhancing attention using pharmacological substances. A total of 160 subjects participated in our randomized, placebocontrolled, and double-blind experimental study. We find that enhancing attention through boosting the noradrenergic system with reboxetine improves the quality of choice as captured by multiple different measures of rationality. Eye-tracking suggests that boosting noradrenaline promotes more rational choice by efficiently directing attention to more valuable options. Other attention-enhancing drugs (methylphenidate, which boosts the dopaminergic system, and nicotine, which boosts the cholinergic system) improve rationality to a lesser extent. Aside from testing the limited attention hypothesis directly, our results have implications for welfare economics, policy-design, and public health. |
| Keywords: | Limited attention, rationality, pharmacology |
| JEL: | B41 C91 D01 D60 D91 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:zur:econwp:476 |
| By: | Christopher Hoy (Melbourne Institute of Applied Economic and Social Research); Yeon Soo Kim; Saad Imtiaz; Ana Maria Rojas Mendez; Moritz Meyer; Gustavo Javier Canavire Bacarreza; Lydia Kim; William Hutchins Seitz; Imane Helmy; Ikuko Uochi; Sering Touray; Juni Singh; Bambang Suharnoko Sjahrir; Utz Pape; Alan Fuchs; Trang Van Nguyen; Defne Gencer; Min A Lee; Akiko Sagesaka; Ivette Contreras |
| Abstract: | Public opposition is a major barrier to economic reforms, such as subsidy removal.Using multilayered, randomized survey experiments with 10, 000 respondents across ten surveys in five countries, this paper shows that opposition to energy price reforms is shaped more by design and communication than by cost. Around 70 percent of respondents strongly opposed a 100 percent immediate price increase, but resistance was nearly halved when reforms were phased in, targeted at high-energy consumers, or paired with compensation. Informational messages also reduced opposition by as much as halving the price increase. An expert prediction survey revealed systematic misunderstandings: specialists underestimated the influence of design features and greatly misperceived coping strategies and compensation preferences. These findings demonstrate that behavioral biases—such as present bias, loss aversion, and fairness heuristics—are as influential as economic costs in shaping people’s opposition to economic reforms, underscoring the importance of careful design and communication of politically sensitive reforms. |
| Keywords: | Political Economy, Public Finance, Subsidies, Climate Change, Energy Policy |
| JEL: | D04 D80 D90 H20 H30 H50 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iae:iaewps:wp2025n14 |
| By: | René Morissette; Feng Hou |
| Abstract: | As Canada’s population gets older and life expectancy keeps increasing, Canadian-born and immigrant seniors may alleviate downward pressures on the overall employment rate through their involvement in the labour market. Many seniors work past their mid-60s for various reasons. Some find it necessary to keep working because of inadequate retirement savings, mortgage payments, unforeseen expenses, or the responsibility to support children and other family members in Canada or abroad. Others choose to work to provide a sense of personal fulfillment, stay active and remain engaged. Working by choice rather than necessity may have important implications for the well-being of seniors. Furthermore, data on employment by choice and necessity may help employers and policy makers understand the factors that influence seniors’ retirement decisions. To shed light on this issue, this article uses data from the Labour Force Survey (LFS) and examines the degree to which Canadian-born and immigrant seniors aged 65 to 74 worked by choice or necessity in 2022 |
| Keywords: | employment, immigrant, seniors, labour market |
| JEL: | J23 M21 |
| Date: | 2024–04–24 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:202400400002e |
| By: | Andreas Haupt |
| Abstract: | Algorithmic recommendation based on noisy preference measurement is prevalent in recommendation systems. This paper discusses the consequences of such recommendation on market concentration and inequality. Binary types denoting a statistical majority and minority are noisily revealed through a statistical experiment. The achievable utilities and recommendation shares for the two groups can be analyzed as a Bayesian Persuasion problem. While under arbitrary noise structures, effects on concentration compared to a full-information market are ambiguous, under symmetric noise, concentration increases and consumer welfare becomes more unequal. We define symmetric statistical experiments and analyze persuasion under a restriction to such experiments, which may be of independent interest. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.16972 |
| By: | Lo, Ashley Wan-Tzu; Kono, Tatsuhito |
| Abstract: | We examine how residential and work locations affect gender differences in time-use burden among homogeneous couples. We theoretically derive gendered values of time (VOTs) by location in spatial equilibrium. We show that (i) changes in VOT according to residential and work locations are determined by shadow prices of time and budget, (ii) households residing closer to the CBD have higher VOTs, and (iii) housework division varies by location, and VOTs differ between spouses spatially. Simulations substantiate these findings. Furthermore, our stated preference experiment confirms that VOT varies with residential location, after controlling for gender and household characteristics. |
| Keywords: | Gender difference, Value of time, Time allocation, Housework, Residential location, Homogeneous households |
| JEL: | D10 R20 R40 |
| Date: | 2025–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126319 |
| By: | Adrian Düll; Heiko Karle; Simon Martin; Heiner Schumacher |
| Abstract: | The classic search models assume that consumers adhere to a particular method of search (sequential or non-sequential) and that they know the true price distribution. In this paper, we evaluate how well the search cost estimates from classic models predict search outcomes - the amount of search and purchase prices - when these assumptions are violated. To this end, we conduct an online experiment in which we vary searchers' information about the price distribution of a homogeneous good. For each treatment, we (i) estimate search costs, (ii) fit each model to the estimated search cost distribution to obtain in- and out-of-sample predictions about outcomes, and (iii) compare predicted and realized outcomes. We find that the prediction performance of each model is largely robust to violations of the informational assumption. Further, the prediction performance of the sequential and non-sequential search model are similar, despite the fact that the search environment strongly favors sequential search. |
| Keywords: | online search, search costs, search cost estimation |
| JEL: | C90 D12 D83 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12221 |
| By: | Youngjae Jeong |
| Abstract: | This paper develops a novel econometric framework for static discrete choice games with costly information acquisition. In traditional discrete games, players are assumed to perfectly know their own payoffs when making decisions, ignoring that information acquisition can be a strategic choice. In the proposed framework, I relax this assumption by allowing players to face uncertainty about their own payoffs and to optimally choose both the precision of information and their actions, balancing the expected payoffs from precise information against the information cost. The model provides a unified structure to analyze how information and strategic interactions jointly determine equilibrium outcomes. The model primitives are point identified, and the identification results are illustrated through Monte Carlo experiments. The empirical application of the U.S airline entry game shows that the low-cost carriers acquire less precise information about profits and incur lower information costs than other airlines, which is consistent with their business model that focuses on cost efficiency. The analysis highlights how differences in firms' information strategies can explain observed heterogeneity in market entry behavior and competition. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.19140 |