|
| ||
|
|
||
Choice Set (choice + set)
Selected AbstractsRepresenting Preferences with a Unique Subjective State SpaceECONOMETRICA, Issue 4 2001Eddie Dekel We extend Kreps' (1979) analysis of preference for flexibility, reinterpreted by Kreps (1992) as a model of unforeseen contingencies. We enrich the choice set, consequently obtaining uniqueness results that were not possible in Kreps' model. We consider several representations and allow the agent to prefer commitment in some contingencies. In the representations, the agent acts as if she had coherent beliefs about a set of possible future (ex post) preferences, each of which is an expected-utility preference. We show that this set of ex post preferences, called the subjective state space, is essentially unique given the restriction that all ex post preferences are expected-utility preferences and is minimal even without this restriction. Because the subjective state space is identified, the way ex post utilities are aggregated into an ex ante ranking is also essentially unique. Hence when a representation that is additive across states exists, the additivity is meaningful in the sense that all representations are intrinsically additive. Uniqueness enables us to show that the size of the subjective state space provides a measure of the agent's uncertainty about future contingencies and that the way the states are aggregated indicates whether these contingencies lead to a desire for flexibility or commitment. [source] Core equivalence for residential land use modelsINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 4 2008Courtney LaFountain D50; D60; R13; R14 I demonstrate that in the monocentric city model, an allocation is in the core if and only if it is an equilibrium allocation, as long as households are endowed with strictly positive quantities of a composite consumption good, enjoy any net trade bundle at least as much as they enjoy one on the boundary of their choice set, have monotonic preferences, have preferences and endowments that are not too different, and as long as there is land at every location. I also show that equilibria exist in these circumstances, so the core is not empty. [source] Stochastic rationality and Möbius inverseINTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 3 2005Antoine Billot C71; D46; D63 Discrete choice theory is very much dominated by the paradigm of the maximization of a random utility, thus implying that the probability of choosing an alternative in a given set is equal to the sum of the probabilities of all the rankings for which this alternative comes first. This property is called stochastic rationality. In turn, the choice probability system is said to be stochastically rationalizable if and only if the Block,Marschak polynomials are all nonnegative. In the present paper, we show that each particular Block,Marschak polynomial can be defined as the probability that the decision-maker faces the loss in flexibility generated by the fact that a particular alternative has been deleted from the choice set. [source] Meta-analysis in model implementation: choice sets and the valuation of air quality improvementsJOURNAL OF APPLIED ECONOMETRICS, Issue 6 2007H. Spencer Banzhaf This research illustrates how the methods developed for meta-analysis can serve to document and summarize voluminous information derived from repeated sensitivity analyses. Our application is to the sensitivity of welfare estimates derived from discrete choice models to assumptions about the choice set. These assumptions affect welfare estimates through both the estimated parameters of the model and, conditional on the parameters, the substitution among alternatives. In our specific application, the evaluation is in terms of estimated benefits of air quality improvements in Los Angeles based on discrete choices of neighborhood and housing. Copyright © 2007 John Wiley & Sons, Ltd. [source] The effect of choice complexity on perception of time spent choosing: When choice takes longer but feels shorterPSYCHOLOGY & MARKETING, Issue 3 2009Barbara Fasolo Two studies examine the effect of the complexity of the choice environment on the perceived duration of the time spent choosing. The experiments demonstrate that the estimation of the time spent making a decision is affected by the number of options available in the choice set. In Experiment 1, participants having to choose 1 of 24 mobile phones tended to underestimate the time spent whereas participants confronted with the choice of 6 mobile phones tended to overestimate the actual time spent. Experiment 2 corroborates this finding, in the presence of varying degrees of attribute correlation. We conclude with theoretical and practical implications for marketers. © 2009 Wiley Periodicals, Inc. [source] A Behavioural Approach Towards Futures Contract UsageAUSTRALIAN ECONOMIC PAPERS, Issue 4 2001Joost M.E. Pennings We propose a behavioural decision-making model to investigate what factors, observable as well as unobservable, owner-managers consider regarding futures contract usage. The conceptual model consists of two phases, reflecting the two-stage decision structure of manager's use of futures. In the first phase owner-managers consider whether futures are within the market choice set for the enterprise. In the second phase the owner-manager decides whether or not to initiate a futures position when confronted with a concrete choice situation. In both phases owner-manager's beliefs and perceptions play an important role. The proposed model is tested on a data set of Dutch farmers, based on computer-assisted personal interviews. Because we incorporate latent variables (e.g., perceptions and beliefs) in both phases, we propose an estimation procedure that takes the measurement error of these latent variables explicitly into account. The implications of the behavioural decision-making model for futures contract design are derived. [source] Complexity in choice experiments: choice of the status quo alternative and implications for welfare measurement,AUSTRALIAN JOURNAL OF AGRICULTURAL & RESOURCE ECONOMICS, Issue 4 2009Peter Boxall We examine the propensity of respondents to choose the status quo (SQ) or current situation alternative as a function of complexity in two separate state-of-the-world choice experiments. Complexity in each choice set was characterized as the number of single and multiple changes in levels of attributes from the current situation and the order of the choice task in the sequence of multiple tasks provided to respondents. We show that increasing complexity leads to increased choice of the SQ and that a respondent's age and level of education also influenced this choice. We outline the effects of the alternate approaches for incorporating the SQ into welfare measurement. These findings have implications for the design of stated preference experiments, examining passive use values and for empirical analysis leading to welfare measurement. [source] Meta-analysis in model implementation: choice sets and the valuation of air quality improvementsJOURNAL OF APPLIED ECONOMETRICS, Issue 6 2007H. Spencer Banzhaf This research illustrates how the methods developed for meta-analysis can serve to document and summarize voluminous information derived from repeated sensitivity analyses. Our application is to the sensitivity of welfare estimates derived from discrete choice models to assumptions about the choice set. These assumptions affect welfare estimates through both the estimated parameters of the model and, conditional on the parameters, the substitution among alternatives. In our specific application, the evaluation is in terms of estimated benefits of air quality improvements in Los Angeles based on discrete choices of neighborhood and housing. Copyright © 2007 John Wiley & Sons, Ltd. [source] Producers' complex risk management choicesAGRIBUSINESS : AN INTERNATIONAL JOURNAL, Issue 1 2008Joost M.E. Pennings Producers have a wide variety of risk management instruments available, making their choice(s) complex. The way producers deal with this complexity can vary and may influence the impact that the determinants, such as risk aversion, have on their choices. A recently developed choice bracketing framework recognizes that producers are unable to evaluate all alternatives simultaneously and that to manage a complex task, they often group or bracket individual alternatives and their consequences together in choice sets. Data on 1,105 U.S. producers show that producers do not use all available combinations of risk management tools and that the influence of the determinants of producer's risk management decisions are not necessarily the same across risk management strategies within and across bracketing levels. The findings may help resolve puzzling results on the role that well-known determinants of risk management behavior have on producers' choices, extending knowledge on producers' risk management behavior. Further, the findings have managerial implications for policy makers and agribusiness companies that provide risk management services. [EconLit citations: M000, G1000, Q130] © 2008 Wiley-Liss, Inc. [source] The Limits of Rational Choice: New Institutionalism in the Test Bed of Central Banking Politics in AustraliaPOLITICAL STUDIES, Issue 3 2002Stephen Bell This paper tests the explanatory capacities of different versions of new institutionalism by examining the Australian case of a general transition in central banking practice and monetary politics: namely, the increased emphasis on low inflation and central bank independence. Standard versions of rational choice institutionalism largely dominate the literature on the politics of central banking, but this approach (here termed RC1) fails to account for Australian empirics. RC1 has a tendency to establish actor preferences exogenously to the analysis; actors'motives are also assumed a priori; actor's preferences are depicted in relatively static, ahistorical terms. And there is the tendency, even a methodological requirement, to assume relatively simple motives and preference sets among actors, in part because of the game theoretic nature of RC1 reasoning. It is possible to build a more accurate rational choice model by re-specifying and essentially updating the context, incentives and choice sets that have driven rational choice in this case. Enter RC2. However, this move subtly introduces methodological shifts and new theoretical challenges. By contrast, historical institutionalism uses an inductive methodology. Compared with deduction, it is arguably better able to deal with complexity and nuance. It also utilises a dynamic, historical approach, and specifies (dynamically) endogenous preference formation by interpretive actors. Historical institutionalism is also able to more easily incorporate a wider set of key explanatory variables and incorporate wider social aggregates. Hence, it is argued that historical institutionalism is the preferred explanatory theory and methodology in this case. [source] | ||||||||||||||||||||||