|
on Discrete Choice Models |
| By: | Pawel Adrjan; Mária Balgova; Simon Jäger; Jonas Jessen; Jason Sockin |
| Abstract: | Discrete choice experiments are widely used to estimate workers’ willingness to pay (WTP) for job amenities under the assumption that varying an attribute does not change workers’ beliefs about other job attributes. We test this assumption by embedding an amenity with a known market price—a popular monthly public transport pass—in a largescale discrete choice experiment with German workers. Many workers, including public transport users, overvalue the ticket by more than 100%, despite WTP for other attributes aligning with the literature. A complementary belief-elicitation experiment shows that advertising an amenity, such as the pass but also common amenities like work from home, causally shifts beliefs about unlisted attributes of the job. Posted wages similarly signal unlisted attributes so that wage variation, the money metric for WTP calculation, is itself contaminated by belief spillovers—such as higher pay signaling heightened stress. These spillovers imply that discrete choice estimates capture perceived bundles rather than isolated attributes, and distort current estimates of non-wage compensation and monopsony power. |
| JEL: | C25 C83 D83 D84 D91 J0 J31 J32 J42 J64 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35457 |
| By: | Mohammad Amin Ashena; Adam Weiss; Jason Hawkins; Lina Kattan |
| Abstract: | Effective congestion management strategies require a detailed understanding of how travellers respond to different pricing interventions. This paper presents an in-depth analysis of traveller behaviour under congestion pricing scenarios, focusing specifically on mode and departure time decisions. Utilizing stated preference survey data from commuters in Calgary, Canada, three discrete choice models including Multinomial Logit, Nested Logit, and Cross-Nested Logit are developed and compared. Results indicate that the Cross-Nested Logit model provides superior behavioural realism and flexibility by capturing simultaneous substitutions across modes and departure times. Spatial analysis and elasticity assessments reveal substantial geographic variation in traveller sensitivity to pricing, particularly highlighting stronger responses among commuters travelling to high-demand central locations and during peak travel periods. Further elasticity analyses clarify behavioural patterns, identifying traveller groups with varying degrees of flexibility. Policy analyses underscore the effectiveness of targeted, dynamic tolling, particularly cordon-based pricing combined with time-specific toll adjustments, in reducing congestion levels. Additionally, the findings highlight the necessity of complementary measures, including improved transit services and targeted discounts, to ensure equitable outcomes. The findings offer targeted insights into how specific pricing strategies such as cordon, distance, and travel time-based tolls can be used to influence travel behaviour, reduce peak-period congestion, and guide equitable policy design in urban transportation planning. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.29756 |
| By: | Rui Yao; Kenan Zhang |
| Abstract: | Large-scale traffic assignment requires equilibrium models that are both behaviorally plausible and computationally tractable. This paper develops a perturbed utility Markovian equilibrium (PUME) framework that preserves the scalability of link-based Markovian traffic equilibrium models and extends their applicability to settings with boundary choice probabilities, undiscounted network loading, and general link interactions. As the behavioral basis of PUME, we first develop the perturbed utility Markovian choice model (PUMCM) in which the Bellman optimality operator is defined through a convex surplus function whose gradient directly yields the optimal policy. The model generalizes existing additive random utility (ARUM) Markovian choice models and admits both interior and boundary choice probabilities. Accordingly, unattractive links can receive zero flow without imposing ex ante choice-set restrictions as in existing ARUM models. We establish conditions under which the corresponding Markov decision problem is well posed and yields a proper demand mapping. We then formulate the equilibrium as a variational inequality (VI) problem on the dual cost space and establish its existence and uniqueness. Particularly, the VI formulation of PUME accommodates non-separable and asymmetric cost structures and thus offers a more flexible modeling framework than existing Markovian traffic equilibrium (MTE) models. For computation, we develop a modified policy iteration method for network loading and a safeguarded accelerated meta-algorithm for computing equilibrium. Both algorithms are proven to be globally convergent and have demonstrated satisfactory numerical performances. Experiments on benchmark and synthetic networks further show that the proposed framework is highly scalable and robust towards a wide variety of demand-supply settings. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.09568 |
| By: | Po Hyun Sung; Ben Wincelberg |
| Abstract: | Standard stochastic choice models used to estimate risk aversion can lead to risk-aversion reversals, where a more risk-averse individual chooses a riskier lottery more frequently than a less risk-averse individual. We study when reversals are implied by the preference specification rather than the noise specification. We say that two utilities imply reversals in a given noise framework if reversals arise for every specification of noise for each individual. For weak utility, a flexible class that includes logit and probit and allows for menu-dependent noise, two utilities imply reversals if and only if their curvature ratio is unbounded. This condition holds for CARA, CRRA, and their generalizations, for which reversals arise for empirically relevant coefficients and lotteries, raising concerns about resulting estimates and out-of-sample predictions. Finally, we show that equicautious HARA, sum-ex, and sum-power utilities do not imply reversals and that, moreover, these families remain well-behaved for multinomial choice. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.05686 |
| 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 decision-making. |
| Keywords: | Narratives; Experts |
| JEL: | D83 D84 D12 E32 E71 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20759 |
| By: | Andrew Chesher; Adam M. Rosen; Yuanqi Zhang |
| Abstract: | This paper introduces a new approach to econometric analysis of nonlinear panel data models when the number of observations per observational unit is small. In such models the presence of variables that are constant within, while varying across, units results in an incidental parameter problem. The approach taken in this paper removes these incidental parameters via projection, which produces a correspondence specifying all combinations of observed variables and within-unit-varying unobserved heterogeneity that are achievable by choice of some value of the unit-specific incidental parameters. With unit-specific variables removed, there is no need for assumptions concerning their joint distribution with other variables. The result is an incomplete model which is typically partially identifying. Identified sets are characterized via moment inequalities using tools of random set theory. Examples of application to static and dynamic models with discrete or continuous outcomes using distribution-free restrictions on within-unit-varying unobserved heterogeneity are presented. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.10043 |
| By: | Fritz Theden-Schow (Department of Food and Resource Economics, University of Copenhagen); Max Nielsen (Department of Food and Resource Economics, University of Copenhagen); Sigbjørn Tveteraas (Department of Safety, Economics, and Planning, University of Stavanger); Brian H. Jacobsen (Department of Food and Resource Economics, University of Copenhagen); Joshua Cabell (Norwegian Centre for Organic Agriculture (NORSØK)); Rasmus Nielsen (Department of Food and Resource Economics, University of Copenhagen) |
| Abstract: | Worldwide, fisheries and related industries produce large quantities of marine residues, such as fish cutoffs, heads and backbones, often ending up as waste or only extracting the fish oil and soluble protein via hydrolysis, leaving sediment of bone particles, etc. unused. However, research and practice show that these residues can be applied as fertilizers with an immediate effect on plant growth. If production of fertilizers is economically viable, utilization of marine residues can be improved and simultaneously meet a demand for fertilizers in certified organic farming. This paper analyzes economic viability of producing marine-based organic fertilizers in Norway and Denmark. From interviews with fertilizer producers, the willingness to pay for one kilogram of an acid preserved bone material of captured white fish, made from minced heads, backbones, skin, organs etc., appearing as a residue product when extracting fish oil and soluble proteins during hydrolysis, was identified. With an average N-content of 4.2%, a positive willingness to pay was identified, between 0.078 and 0.272 €/kg, dependent on market conditions. With the positive willingness to pay, it may be economically viable to apply the material to produce marine-based organic fertilizers, revealing a potential for further exploitation of the by-products from captured white fish for fertilizers in certified organic farming. |
| Keywords: | Marine residue, White fish marine residues, Willingness to pay, Economic viability |
| JEL: | Q16 Q22 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:foi:wpaper:2026_02 |