Discrete Choice Models
http://lists.repec.org/mailman/listinfo/nep-dcm
Discrete Choice Models
2024-07-15
A discrete choice experiment to measure the impact of flood risk information on residential location choices.
https://d.repec.org/n?u=RePEc:ulp:sbbeta:2024-22&r=&r=dcm
This article investigates residential choice in flood-prone areas with attractive natural amenities. In a discrete choice experiment involving 472 French homeowners, we analyse the effects of flood risk information disclosure. Respondents make trade-offs between house characteristics, amenities and location in flood-prone areas, with two information treatments about the consequences of flooding and protection measures. We also examine the influence of existing information tools. The econometric models reveal a general aversion to flood-prone areas and a negative effect of information about the consequences of flooding. Buyer-tenant information influences the decision to leave flood-prone areas, while zoning influences the decision to stay.
Serge Garcia
Katrin Erdlenbruch
Boniface Derrick Mbarga
choice experiment; flood risk-amenity trade-off; information treatment; mixed logit; attribute willingness to pay; residential choice.
2024
How to assess the fit of choice models with Stata?
https://d.repec.org/n?u=RePEc:boc:dsug24:04&r=&r=dcm
McFadden developed the conditional multinomial logit model in 1974 using it for rational choice modeling. In 1993, Stata introduced it in version 3. In 2007, Stata extended this model to asclogit or ascprobit being able to estimate the effects of alternative-speci
Wolfgang Langer
2024-06-12
Learning, experimentation and the convergence of the discovered preferences
http://d.repec.org/n?u=RePEc:sgh:kaewps:2024098&r=&r=dcm
In this article I study whether the interim preferences of the consumer can be expected to converge to their real preferences in the process of preference discovery. I construct a subjective expected utility model of the consumer, where the uncertainty results from the imperfect knowledge of their own preferences. This uncertainty is partially resolved by experimental consumption. Under the assumption that the subjective probability of the consumer satisfies learning monotonicity, I identify the equivalent conditions for the consumer to experiment. My results show that the interim preferences never fully converge to the real preferences of the consumer. Instead, the preference discovery either terminates, meaning that the consumer ceases to experiment, or only experiments within some neighborhood of the best currently known alternative, and never sufficiently explores their preferences.
Marek Kapera
Taste uncertainty, Preference discovery, Learning through consumption, Conditional preferences, Experimental preferences
2024-03
Did Harold Zuercher Have Time-Separable Preferences?
https://d.repec.org/n?u=RePEc:arx:papers:2406.07809&r=&r=dcm
This paper proposes an empirical model of dynamic discrete choice to allow for non-separable time preferences, generalizing the well-known Rust (1987) model. Under weak conditions, we show the existence of value functions and hence well-defined optimal choices. We construct a contraction mapping of the value function and propose an estimation method similar to Rust's nested fixed point algorithm. Finally, we apply the framework to the bus engine replacement data. We improve the fit of the data with our general model and reject the null hypothesis that Harold Zuercher has separable time preferences. Misspecifying an agent's preference as time-separable when it is not leads to biased inferences about structure parameters (such as the agent's risk attitudes) and misleading policy recommendations.
Jay Lu
Yao Luo
Kota Saito
Yi Xin
2024-06
Not on my plate! Using mental accounting to promote meat substitutes
https://d.repec.org/n?u=RePEc:tse:wpaper:129428&r=&r=dcm
We implement an online survey on a sample of 1, 088 French respondents to assess their willingness-to-pay (WTP) for meat substitutes and to test the effectiveness of informational treatments aimed at encouraging a switch to these substitutes. Using insights from the mental accounting theory, our treatments inform respondents about the carbon content of the different alternatives. We show that there is no significant difference in the WTP between the veggie and meat-like alternatives, both exceeding the WTP for cultured meat. Second, we detect weak and heterogeneous effects of our informational treatments. Third, our study emphasizes the need for careful consideration in study design, as certain results appeared to challenge the independence of irrelevant alternatives principle.
Andersson, Henrik
Ouvrard, Benjamin
Externalities; Meat substitutes; Mental accounting; Willingness-to-pay
2024-06
Cluster-robust jackknife and bootstrap inference for binary response models
https://d.repec.org/n?u=RePEc:arx:papers:2406.00650&r=&r=dcm
We study cluster-robust inference for binary response models. Inference based on the most commonly-used cluster-robust variance matrix estimator (CRVE) can be very unreliable. We study several alternatives. Conceptually the simplest of these, but also the most computationally demanding, involves jackknifing at the cluster level. We also propose a linearized version of the cluster-jackknife variance matrix estimator as well as linearized versions of the wild cluster bootstrap. The linearizations are based on empirical scores and are computationally efficient. Throughout we use the logit model as a leading example. We also discuss a new Stata software package called logitjack which implements these procedures. Simulation results strongly favor the new methods, and two empirical examples suggest that it can be important to use them in practice.
James G. MacKinnon
Morten {\O}rregaard Nielsen
Matthew D. Webb
2024-06
On the Robustness of Mixture Models in the Presence of Hidden Markov Regimes with Covariate-Dependent Transition Probabilities
https://d.repec.org/n?u=RePEc:udt:wpecon:2024_04&r=&r=dcm
We consider general hidden Markov models that may include exogenous covariates and whose discrete-state-space regime sequence has transition probabilities that are functions of observable variables. We show that the parameters of the observation conditional distribution are consistently estimated by quasi-maximum-likelihood even if the Markov dependence of the hidden regime sequence is not taken into account. Some related numerical results are also discussed.
Demian Pouzo
Zacharias Psaradakis
Martín Sola
Consistency; covariate-dependent transition probabilities; hidden Markov model; mixture model; quasi-maximum-likelihood; misspecified model.
2024-06
Sorting through Cheap Talk: Theory and Evidence from a Labor Market
https://d.repec.org/n?u=RePEc:iza:izadps:dp17052&r=&r=dcm
In a labor market model with cheap talk, employers can send messages about their willingness to pay for higher-ability workers, which job-seekers can use to direct their search and tailor their wage bid. Introducing such messages leads – under certain conditions – to an informative separating equilibrium that affects the number of applications, types of applications, and wage bids across rms. This model is used to interpret an experiment conducted in a large online labor market: employers were given the opportunity to state their relative willingness to pay for more experienced workers, and workers can easily condition their search on this information. Preferences were collected for all employers but only treated employers had their signal revealed to job-seekers. In response to revelation of the cheap talk signal, job-seekers targeted their applications to employers of the right "type, " and they tailored their wage bids, affecting who was matched to whom and at what wage. The treatment increased measures of match quality through better sorting, illustrating the power of cheap talk for talent matching.
Horton, John J.
Johari, Ramesh
Kircher, Philipp
sorting, cheap-talk, gig-economy, freelancer, field-experiment, online job search platform
2024-06
The Preference Lattice
https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_563&r=&r=dcm
Most comparisons of preferences are instances of single-crossing dominance. We examine the lattice structure of single-crossing dominance, proving characterisation, existence and uniqueness results for minimum upper bounds of arbitrary sets of preferences. We apply these theorems to derive new comparative statics theorems for collective choice and under analyst uncertainty, to characterise a general 'maxmin' class of uncertainty-averse preferences over Savage acts, and to revisit the tension between liberalism and Pareto efficiency in social choice.
Gregorio Curello
Ludvig Sinander
preference, lattice, comparative statics, risk-aversion, ambiguity, crown, diamond
2024-06
Impure motivations in social preferences: Experimental evidence from menu choices
https://d.repec.org/n?u=RePEc:gat:wpaper:2406&r=&r=dcm
This article investigates impure motivations in social preferences through an experiment in which participants choose menus of social allocations (i.e. allocations of gains between themselves and another participant). Menu choices reveal the presence of impure motivations: according to a parsimonious theoretical model, negative motivations (e.g. guilt) will imply a preference for smaller menus, whereas positive ones (e.g. pride) a preference for larger sets. By varying the level of publicity of within-menu choice, we can also observe the importance of self- and social image. Data from France and Japan show unambiguously an important impact of impure motivations on preferences on menus, with the suggestion that negative ones exceed positive ones.
Yosuke Hashidate
Tetsuya Kawamura
Fabrice Le Lec
Yusuke Osaki
Benoît Tarroux
Social preference; menu preference; impure motivation; warm glow; guilt; shame; pride; self-esteem
2024
Non-Parametric Identification and Testing of Quantal Response Equilibrium
https://d.repec.org/n?u=RePEc:bca:bocawp:24-24&r=&r=dcm
We study the falsifiability and identification of Quantal Response Equilibrium (QRE) when each player’s utility and error distribution are relaxed to be unknown non-parametric functions. Using variations of players’ choices across a series of games, we first show that both the utility function and the distribution of errors are non-parametrically over-identified. This result further suggests a straightforward testing procedure for QRE that achieves the desired type-1 error and maintains a small type-2 error. To apply this methodology, we conduct an experimental study of the matching pennies game. Our non-parametric estimates strongly reject the conventional logit choice probability. Moreover, when the utility and the error distribution are sufficiently flexible and heterogeneous, the quantal response hypothesis cannot be rejected for 70% of participants. However, strong assumptions such as risk neutrality, logistically distributed errors and homogeneity lead to substantially higher rejection rates.
Johannes Hoelzemann
Ryan Webb
Erhao Xie
Econometric and statistical methods; Economic models
2024-06
Measuring Absolute and Relative Levels of Policy Support using Conjoint Choice Experiments
https://d.repec.org/n?u=RePEc:osf:osfxxx:837ws&r=&r=dcm
Public support is a crucial, often necessary, component of political feasibility for policy proposals. Conjoint experiments are commonly utilised to assess support for policies, particularly how public opinion varies by specific policy instruments, and packaged designs. Yet, while robust methodologies have been identified to compare relative levels of support between policy instruments, current strategies often limit substantive interpretations of the absolute level of support. Given the importance of majority support thresholds across democratic settings, identifying absolute levels of support can provide critical information when assessing the feasibility of policy proposals. Here, we empirically explore a simple methodological advancement -- how do estimations of relative and absolute levels of support vary by discrete choice, proposal vote and binary ratings response methods? Drawing upon evaluations of support for carbon taxation in the United States as a case study, we find that similar levels of relative support can be found across response methods, but that the absolute level varies substantially by method and whether abstention is allowed. We further evaluate response methods by efficiency and consistency, to develop a set of recommendations towards utilising multiple response items to simultaneously assess relative and absolute levels of support for policies in conjoint-experimental designs.
Smith, E. Keith
Kolcava, Dennis
2024-06-06
Coherent distributions: Hilbert space approach and duality
http://d.repec.org/n?u=RePEc:arx:papers:2405.04375&r=&r=dcm
Let $X$ be a Bernoulli random variable with the success probability $p$. We are interested in tight bounds on $\mathbb{E}[f(X_1, X_2)]$, where $X_i=\mathbb{E}[X| \mathcal{F}_i]$ and $\mathcal{F}_i$ are some sigma-algebras. This problem is closely related to understanding extreme points of the set of coherent distributions. A distribution on $[0, 1]^2$ is called $\textit{coherent}$ if it can be obtained as the joint distribution of $(X_1, X_2)$ for some choice of $\mathcal{F}_i$. By treating random variables as vectors in a Hilbert space, we establish an upper bound for quadratic $f$, characterize $f$ for which this bound is tight, and show that such $f$ result in exposed coherent distributions with arbitrarily large support. As a corollary, we get a tight bound on $\mathrm{cov}\, (X_1, X_2)$ for $p\in [1/3, \, 2/3]$. To obtain a tight bound on $\mathrm{cov}\, (X_1, X_2)$ for all $p$, we develop an approach based on linear programming duality. Its generality is illustrated by tight bounds on $\mathbb{E}[|X_1-X_2|^\alpha]$ for any $\alpha>0$ and $p=1/2$.
Egor Kravchenko
2024-05
Consumer preferences matter for transforming food systems for sustainable healthy diets: Evidence from rural Bangladesh
https://d.repec.org/n?u=RePEc:fpr:issbrf:144173&r=&r=dcm
Food system transformation strategies rely on consumer demand response for achieving sustainable healthy diets, but food consumption patterns and consumer preferences are often not well understood in many countries of the global South. This brief examines consumer demand in Bangladesh, a country in the take-off stage of agrifood system transformation, that has experienced improvements in diet quality but also an increasing incidence of overweight, with faster increases in rural than urban areas. The authors estimate responses in consumer demand to changes in incomes and changes in food prices, finding that rural consumer demand is driven by strong preferences for animal-source foods, while the demand for sugar and highly processed foods increases faster than total food demand when income rises. They conclude that agricultural value chain development can be an important policy instrument for improving household diet quality but can also lead to undesirable dietary change if food consumption incentives conflict with nutritional needs.
Ecker, Olivier
Comstock, Andrew R.
de Brauw, Alan
Diao, Xinshen
Talukder, Md. Ruhul Amin
food systems; consumer behaviour; rural areas; healthy diets; demand; overweight; modelling; animal source foods; agricultural value chains; nutrition; Asia; Southern Asia; Bangladesh
2024
Estimating Dyadic Treatment Effects with Unknown Confounders
http://d.repec.org/n?u=RePEc:arx:papers:2405.16547&r=&r=dcm
This paper proposes a statistical inference method for assessing treatment effects with dyadic data. Under the assumption that the treatments follow an exchangeable distribution, our approach allows for the presence of any unobserved confounding factors that potentially cause endogeneity of treatment choice without requiring additional information other than the treatments and outcomes. Building on the literature of graphon estimation in network data analysis, we propose a neighborhood kernel smoothing method for estimating dyadic average treatment effects. We also develop a permutation inference method for testing the sharp null hypothesis. Under certain regularity conditions, we derive the rate of convergence of the proposed estimator and demonstrate the size control property of our test. We apply our method to international trade data to assess the impact of free trade agreements on bilateral trade flows.
Tadao Hoshino
Takahide Yanagi
2024-05