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on Discrete Choice Models |
| By: | Adam, Nasir |
| Abstract: | This study examines farmers’ preferences for fossil-based and fossil-free mineral nitrogen fertilisers as part of efforts to decarbonisation agricultural inputs, using a labelled discrete choice experiment among 211 Swedish crop, dairy and mixed farmers. Fertiliser alternatives are characterised by three attributes: price, climate impact, and production origin. Preferences are analysed using a mixed logit model to capture continuous heterogeneity and a latent class choice model to identify discrete farmer segments. Results show that higher fertiliser prices reduce choice probabilities, while farmers exhibit substantial willingness to pay for fertilisers produced in European Union, United Kingdom and Norway and, in particular, in Sweden (their domestic market). Farmers continue to choose conventional mineral fertiliser over the opt-out alternative even when its climate impact increases. This indicates the central role of mineral nitrogen fertiliser in crop production rather than a preference for higher emissions. Two distinct farmer segments emerge: a larger group that trades off price with production origin and climate attributes, and a smaller group that is primarily price sensitive. In addition, social and economic identities significantly explain membership in the dominant segment, whereas environmental identity plays a more limited role. The findings reveal that farmers trade off price against production origin rather than climate impact: they are willing to pay substantial premiums for supply-security consideration (Swedish fertilisers), but not for reduced climate impact alone. The results suggest that decarbonisation policies in fertiliser markets may be more politically and economically viable when embedded within broader supply-security and preparedness frameworks rather than framed solely as climate premiums. |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes026:397891 |
| By: | Langanke, Nils L.; Grunenberg, Michael H.; Latacz-Lohmann, Uwe |
| Abstract: | This paper investigates how the design of an agglomeration bonus influences farmers’ participation in a stylised peatland restoration scheme. Results from a discrete choice experiment with 110 farmers in Germany indicate that the bonus has only limited influence compared to land-use restrictions. In the mixed logit and latent class estimations the bonus is statistically insignificant and mostly ignored in the decision-making process. Only when preferences are adjusted for attribute non-attendance does the bonus enhance willingness to participate and the scheme’s cost-effectiveness. Overall, voluntary schemes appear insufficient for ambitious peatland restoration goals, suggesting a need to complement incentives with regulatory measures. |
| Keywords: | Institutional and Behavioral Economics |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes026:397892 |
| By: | Ertian Chen; Hiroyuki Kasahara; Katsumi Shimotsu |
| Abstract: | Estimating dynamic discrete choice models with unobserved heterogeneity is computationally costly because it requires repeatedly solving fixed-point equations for all unobserved types. We develop the EM-NPL(q) framework that combines the Expectation-Maximization (EM) algorithm with an inner fixed-point solver truncated to q iterations. For the workhorse class of linear-in-parameters models, we establish a truncation-invariance result: for any q$\geq$1, EM-NPL(q) is numerically identical to the EM-NPL estimator that solves the inner fixed-point problem to convergence. Therefore, the choice of q affects computation but not statistical properties. We also establish consistency, asymptotic normality of our estimator, and local convergence of the EM-NPL(q) algorithm. In Monte Carlo simulations, EM-NPL(q) reduces runtime by at least 20% and can be 3--5 times faster. In an application to cola demand, we show that ignoring unobserved heterogeneity understates long-run own-price elasticities by up to 60%, short-run elasticities by up to 85%, and compensating variation from a soda tax by up to 90%. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.26205 |
| By: | Mzek, Tareq; Piras, Simone; Lozada, Luz-Maria; Premarathne, Mindi |
| Abstract: | Agri‑Environmental Climate Schemes (AECS) are central to Scotland’s environmental goals, but their success depends on voluntary farmer participation. This study used a discrete choice experiment to explore Scottish farmers’ preferences for AECS design. A total of 144 farmers completed an online survey, choosing between hypothetical scheme options that varied in contract duration, environmental objective, collaboration requirements, technical assistance, payment type, monitoring approach, and payment level. Data were analysed using conditional and mixed logit models. Results show that farmers are generally not in favour of having to collaborate with other farmers; the option to apply jointly was consistently viewed negatively across all models. There is some evidence that farmers prefer shorter contracts over longer ones, and that they are open to results‑based payments and schemes focused on soil health. The payment (monetary) attribute itself was not statistically significant, and its large standard deviation suggests farmers are divided on whether payments drive their choices: some respond positively and others negatively. Willingness to accept estimates should be treated with caution given the uncertainty around the payment coefficient. These findings highlight the importance of farmers’ independence and flexibility when designing schemes. The results also point to potential interest in soil health and results‑based payments, and that the payment level is not necessarily the main driver beyond application decisions. These findings can assist policymakers in understanding what truly matters to farmers when designing the AECS. By incorporating farmers’ views, they can not only encourage higher participation rates but also ensure that the schemes on offer align more closely with farmers’ actual requirements. |
| Keywords: | Environmental Economics and Policy |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes026:397890 |
| By: | Liu, Qi; Hanley, Nick; Yi, Yuanyuan; Xu, Jintao; Kontoleon, Andreas |
| Abstract: | Payment for Ecosystem Service (PES) schemes, particularly those involving tree-planting initiatives, are increasingly recognized for their great potential to mitigate carbon emissions and address climate change. Among them, Outcome-Based Payments (also known as results-based schemes) have gained attention for their cost-effectiveness and potential to improve environmental efficiency. This study examines farmers’ preferences towards participating in an outcome-based tree planting scheme using a discrete choice experiment conducted in Yunnan, China. We explicitly incorporate uncertainty in environmental outcomes, which in turn affects payment structures. We also elicit farmers’ risk perceptions through incentivized field lottery games and examine its influence on participation decisions and marginal willingness-to-accept (WTA). Based on a sample of 340 respondents, we find that farmers’ willingness to participate is significantly influenced by contract attributes, including the subsidy level, provision of training and technical guidance, environmental performance requirements, and the degree of uncertainty involved. Our findings further highlight the role of uncertainty and risk perceptions in shaping farmers’ decision-making processes in outcome-based PES. |
| Keywords: | Resource /Energy Economics and Policy |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes026:397897 |
| By: | Soogand Alavi; Salar Nozari |
| Abstract: | Consumers are increasingly delegating purchase decisions to AI agents, providing natural-language descriptions of their preferences and identity. We argue that these representations constitute an information channel, role coherence, through which sellers can infer willingness to pay without explicit disclosure by the buyer agent, leading to preference leakage. In an experiment where a language-model buyer agent shops on behalf of a verbal consumer profile, we show that seller-side inference from dialogue alone recovers willingness to pay nearly one-for-one. Comparing this setting to a numeric-budget condition with confidentiality instructions cleanly isolates role coherence as distinct from instruction-following failure. Because this leakage arises from delegation itself, it cannot be mitigated at the prompt level. Instead, we propose architectural interventions that trade off personalization against preference privacy. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.26220 |
| By: | Ghorpade, Yashodhan (World Bank); Jasmin, Alyssa (World Bank); Abdur Rahman, Amanina (World Bank) |
| Abstract: | Debates on gig work often treat flexibility and social protection as substitutes. This paper shows that gig workers value different forms of flexibility differently, and that preferences for flexibility and social protection can be complementary. Using discrete-choice experiments with digital freelancers in Malaysia, with standard workers as a benchmark, we examine preferences for work location and scheduling autonomy. Four findings emerge. First, gig workers strongly value spatial autonomy and are willing to pay to work-from-home. Second, preferences for scheduling flexibility are heterogeneous, with many, including freelancers, preferring fixed schedules. Third, willingness to pay for long-term protection in the form of retirement savings increases with both types of autonomy. Fourth, willingness to pay for unemployment insurance is linked only to work-location flexibility. Gig workers possibly associate remote work, but not flexible hours, with greater employment uncertainty, and therefore demand stronger protection against unemployment risks. Flexibility and protection can therefore act as complements rather than substitutes in the gig economy. |
| Keywords: | gig economy, flexible work arrangements, work-from-home, work scheduling, job amenities, social insurance, labor market risk, discrete choice experiments |
| JEL: | J31 J22 J41 J65 D81 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18589 |
| By: | Arbaaz Karim |
| Abstract: | Aesthetic qualities command measurable premiums in traditional goods markets. However, it remains unclear whether users are willing to pay for such qualities in AI-generated text. This paper estimates the willingness to pay for aesthetic attributes in large language model outputs using an online experiment with N = 117 participants. Participants evaluated responses from four anonymized models across academic, professional, and personal contexts, rated outputs along multiple dimensions, and submitted bids for access using a Becker-DeGroot-Marschak (BDM) mechanism. We find no statistically significant relationship between perceived aesthetic quality and willingness to pay. While participants systematically distinguish between outputs and exhibit consistent preferences over stylistic features, these differences do not translate into higher monetary valuation. Further analysis shows that aesthetic and functional attributes load onto a single latent factor, suggesting that users perceive quality as a unified construct rather than a separable aesthetic dimension. These results imply that, in current large language model (LLM) markets, aesthetic improvements function as baseline expectations rather than sources of price differentiation. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.05578 |
| By: | Yoshitsugu Kitazawa |
| Abstract: | This paper proposes linear estimation methods for dynamic fixed effects logit models only with time effects (i.e., those only with time dummies and only with time trends). The linear estimators point-identify transformations of parameters of interest for the models if five or more time periods are provided and then point-identify the parameters of interest. What it boils down to is that root-N consistent estimations are attainable for these models. Monte Carlo results corroborate this conclusion. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.24150 |
| By: | Stefan Hubner |
| Abstract: | This paper develops a method to use singles' data in a non-parametric revealed preference setting of collective household choice. We use it to test the controversial assumption of preference stability between singles and couples, without data on intra-household allocation or marital transitions. We show that, under the preference-stability hypothesis, consumption choices from an endogenously matched population admit a conditional random-utility representation over counterfactual pairings of couples and singles. Preference stability is testable as a feasibility restriction on the observed marginal choice distributions. We reject the hypothesis using consumption data from the Dutch LISS, the Russian RLMS, and the Spanish ECPF panels. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.04771 |
| By: | Haoyuan Xu; Wei Miao; Geert Dhaene; Jad Beyhum |
| Abstract: | The maximum likelihood estimator in nonlinear panel data models with interactive fixed effects is biased. Several bias correction methods, such as analytical and jackknife approaches, have been proposed to enable valid inference. This paper shows that the parametric bootstrap also enables valid inference in such models. In particular, we show that the parametric bootstrap replicates the asymptotic distribution of the maximum likelihood estimator. Therefore, it yields asymptotically unbiased estimates and confidence sets with asymptotically correct coverage. We also propose a transformation-based bootstrap confidence interval that delivers improved finite-sample performance. Simulation results support the theoretical findings. Finally, we apply the proposed method to examine technological and product market spillover effects on firms' innovation behavior. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.26826 |
| By: | Samuele Centorrino; Fr\'ed\'erique F\`eve; Jean-Pierre Florens |
| Abstract: | We develop a nonparametric approach to identify and estimate consumer preferences and unobserved heterogeneity under nonlinear price schedules. Leveraging variation across multiple price schedules, we show that both the utility function and the distribution of preference types can be nonparametrically identified. The quantile function of unobserved types becomes solution of a functional equation, and we derive conditions ensuring identification. We propose an iterative approach for estimation, in which the regularization bias decays exponentially in the number of iterations while the variance grows only polynomially, yielding a near-parametric convergence rate. We propose a valid bootstrap procedure for finite-sample inference and extend the framework to accommodate potential endogeneity of prices and additional observed heterogeneity. Monte Carlo simulations and an empirical application to data from a European mail carrier demonstrate how we can recover the utility functions and preference distributions in finite samples. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.25507 |
| By: | Chris Chambers; Yusufcan Masatolioglu; Paulo Natenzon; Collin Raymond |
| Abstract: | We provide a theoretical framework to understand how widely used measures of choice difficulty relate. In a binary-option Bayesian expected-utility framework, we show that three measures of difficulty, (i) understanding (ex-ante value), (ii) choice randomness, and (iii) confidence that the chosen option is ex post correct, are, in general, unrelated, and that this result extends to other potential measures like attenuation. We provide intuitive sufficient conditions which align the orders, using both restrictions on Blackwell experiments that capture well known classes (such as logit) and restrictions on payoffs and demonstrate that in psychophysical tasks that pay only for correctness, confidence coincides with understanding. We show willingness-to-accept to switch, when measured in utils, is equivalent to understanding. Our results suggest caution in interpreting measures of choice difficulty as well as the degree of portability between economics and psychophysics experiments |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.26761 |
| By: | Hyungsik Roger Moon; Matthew Shum; Martin Weidner |
| Abstract: | We extend the Berry, Levinsohn and Pakes (BLP, 1995) random coefficients discrete-choice demand model, which underlies much recent empirical work in IO. We add interactive fixed effects in the form of a factor structure on the unobserved product characteristics. The interactive fixed effects can be arbitrarily correlated with the observed product characteristics (including price), which accommodates endogeneity and, at the same time, captures strong persistence in market shares across products and markets. We propose a two-step least squares-minimum distance (LS-MD) procedure to calculate the estimator. Our estimator is easy to compute, and Monte Carlo simulations show that it performs well. We consider an empirical illustration to US automobile demand. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.00602 |
| By: | Zexuan Wang (LIRAES (URP_ 4470) - Laboratoire Interdisciplinaire de Recherche Appliquée en Economie de la Santé - UPCité - Université Paris Cité); Jonathan Sicsic (LIRAES (URP_ 4470) - Laboratoire Interdisciplinaire de Recherche Appliquée en Economie de la Santé - UPCité - Université Paris Cité); Pauline Chauvin (LIRAES (URP_ 4470) - Laboratoire Interdisciplinaire de Recherche Appliquée en Economie de la Santé - UPCité - Université Paris Cité, SUAD_SAFIR - SUAD - Sorbonne University Abu Dhabi, SUAD - Sorbonne University Abu Dhabi) |
| Abstract: | Context: There is growing recognition of the importance of measuring wellbeing based on individuals' capabilities, rather than focusing solely on health outcomes when evaluating health and social care interventions. The ICEpop Capability Measure for Adults (ICECAP-A) operationalizes this approach by assessing five core dimensions of capability well-being. Capability value sets for ICECAP-A have already been developed in the United Kingdom, the Netherlands, and Hungary.Methods: This study aims to establish the first French value set for the ICECAP-A. We conducted an online, self-administered survey with a representative sample of the French general population (N = 3, 546). Respondents completed a series of profile-case best-worst scaling tasks. Preferences for ICECAP-A attributes were analyzed using a scale-adjusted latent class best-worst choice model, which accounts for heterogeneity in choice behavior.Results: A latent class model with four classes provided the best fit to the data. The first class displayed a strong preference for Autonomy. The second class expressed relatively balanced preferences across all capabilities. The third and fourth classes prioritized respectively Enjoyment and Attachment; however, the fourth class did not value Stability. Based on these findings, a capability value set was estimated for the French population. At the aggregate level, Attachment and Enjoyment emerged as the most important capabilities, followed by Autonomy, Stability, and Achievement.Conclusion: This study presents the first ICECAP-A value set for France. It can be applied in economic evaluations and policy decision-making to better reflect well-being beyond traditional health related outcomes. |
| Keywords: | Best-Worst Scaling Capability Approach Well-Being, Best-Worst Scaling, Capability Approach, Well-Being |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05600480 |
| By: | Leppert, Daniel; Aftab, Ashar; Scarpa, Riccardo |
| Abstract: | Agriculture can contribute to catchment flooding via land use change. The viability of natural flood management (NFM) projects differs substantially between farms, which motivates research into spatially targeted NFM schemes. This paper proposes a hypothetical market in NFM contracts with exchange rates (‘trading ratios’) that incentivise farmers to voluntarily reallocate NFM contracts to farms where the land is most suitable for NFM. Voluntary trading is theorised to alleviate concerns expressed by farmers about unfairness with targeted payments for flood management. This is the first cost-effectiveness analysis of a hypothetical market in NFM. The cost is estimated through a discrete choice experiment with a representative sample of English farmers. The effectiveness of NFM is simulated using a hydrological connectivity computer model. Results show that trading can represent significant annual cost saving per farm across simulated schemes. A higher transaction cost reduces the cost savings achievable from trading, although even at 10% of the payment, trading reduces the overall cost by no less than £10, 000 annually. |
| Keywords: | Demand and Price Analysis |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes026:397877 |
| By: | Felix Josua Lang (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | There are repeatedly raised concerns that marketing and consumer research often neglects to implement realistic studies that foster generalizability to real-world contexts, thereby limiting their findings’ practical relevance. Representative of this issue, confidence in context effects’ (i.e., shifts in consumer preferences based on specific choice set compositions) applicability to actual consumer decisions was challenged. Indeed, prior investigations demonstrated that context effects research generally contained low levels of realism, resulting in calls to implement a set of proposed guidelines (e.g., consequential instead of hypothetical choices) to produce generalizable and practically relevant insights. This present systematic literature review analyzes a total of 460 individual assessments of 15 context effects in product choice from over 40 years in 30 top-tier marketing journals whether they implemented these guidelines as well as further experimental characteristics. Despite notable improvements, there are still overall low levels of realism—most critically by not imposing economic consequences—but pronounced differences in the degree of generalizability between the analyzed context effects, with the attraction and compromise effect having the most solid foundation regarding relevant results. Consequently, this article presents a refined and easy-to-follow framework to implement realistic context effects research as well as a research agenda to generate practically relevant future findings in a systematic approach. For practitioners, this article provides an overview of context effects’ level of confidence regarding their current real-world applicability as well as guidance on how to identify research that is relevant for their application scenarios. |
| Keywords: | attraction effect; compromise effect; context effects; external validity; practical relevance; systematic literature review |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:mag:wpaper:26001 |
| By: | Sydnee Caldwell; Ingrid Haegele; Jörg Heining |
| Abstract: | We estimate firm-specific amenity valuations using discrete choice experiments embedded in a large-scale survey of German workers linked to administrative records. Workers rank hypothetical offers from real firms they would consider joining, with randomized wages identifying money-metric valuations. Valuations vary substantially across firms and demographic groups, yet a single index performs surprisingly well. Valuations are approximately orthogonal to firm wage premia; they therefore do not offset between-firm wage inequality. However, male-female differences in amenity valuations explain part of the gender wage gap. |
| JEL: | J31 J32 J33 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35149 |
| By: | Jad Beyhum; Geert Dhaene; Cavit Pakel; Martin Weidner |
| Abstract: | We study the estimation of average effects in nonlinear panel data models with fixed effects when the time dimension $T$ is only moderately large. Our approach, called approximate operator inversion (AOI), offers a new perspective on bias correction. Instead of first estimating unit-specific fixed effects and then correcting the resulting plug-in bias, AOI approximately inverts the likelihood-induced mapping from the fixed-effect distribution to the outcome distribution. AOI can be interpreted as the limit of an infinitely iterated bias correction scheme, and this limit is available in closed form. We show that the bias of the AOI estimator has a rate double robustness property and converges to zero at an exponential rate in $T$ under regularity conditions. Our asymptotic theory requires $T \to \infty$, but the exponential convergence rate of the bias means that finite-sample performance is very good even for moderately large $T$. We establish asymptotic normality and provide feasible inference. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.05037 |
| By: | Zizhong Yan; Jingrong Li; Yi Zhang |
| Abstract: | Estimating network formation models with degree heterogeneity raises two problems in empirical networks. First, agents that send no links, receive no links, or link to all remaining agents can make the fixed-effects MLE fail to exist. Trimming these agents changes the estimation sample and induces selection bias. Second, the incidental-parameter problem biases common parameters and average partial effects. We resolve both issues through a penalized likelihood approach. Our leading specification is a directed network model with reciprocity, nesting the standard undirected and non-reciprocal directed models. The penalty guarantees finite-sample existence and yields bias corrections for coefficients and partial effects. We establish asymptotic results without imposing compactness on the fixed-effects. Allowing the fixed effects to diverge at a logarithmic rate, our asymptotic framework accommodates the degree sparsity ubiquitous in large empirical networks. A global trade application demonstrates that our estimator avoids selection bias and recovers robust parameters where conventional methods fail. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.00771 |