understanding heterogeneous preferences in random utility models a latent class approach a finite mixture approach toconditional logit models is developed in whichlatent classes are used to promoteunderstanding of systematic heterogeneity the model is applied to wilderness recreationin which a branded choice experiment involvingchoice of one park from a demand system wasadministered to a sample of recreationists the basis of membership in the classes orsegments in the sample involved attitudinalmeasures of motivations for taking a trip aswell as their stated preferences overwilderness park attributes the econometricanalysis suggested that four classes of peopleexist in the sample using the model toexamine welfare measures of some hypotheticalpolicy changes identified markedly differentwelfare effects than the standard singlesegment model and provided insight into thedifferential impact of alternative policies

serial nonparticipation in repeated discrete choice models we consider alternative econometric strategies for addressing serial nonparticipation that is repeated choice of the same alternative or same type of alternative across a series of choice occasions in data typically analyzed within the repeated discrete choice framework single and double hurdle variants of the repeated discrete choice model are developed and applied to choice experiment and multisite seasonal recreation demand data our results suggest that hurdle models can generate significant improvements in statistical fit and qualitatively different policy implications particularly in choice experiment applications where the proper treatment of serial nonparticipation is relatively more ambiguous

preferences of scotch malt whisky consumers for changes in pesticide use and origin of barley abstract in a case study related to scotch malt whisky production this study analyses consumers perceptions and preferences regarding two aspects that have emerged in the debate on sustainable production and consumption and on environmentally responsible food choice namely i the use of pesticides in agriculture and ii the provenance of food ingredients we carried out a choice experiment to investigate preferences and estimate willingness to pay of scotch malt whisky consumers for pesticide use restrictions and the potential impact on the production of one of its essential ingredients barley using latent class models we find that about half of the respondents are non demanders with respect to both attributes and only a third of the sample population are willing to pay for further pesticide restrictions demand for more environmentally responsible production of scotch malt whisky is therefore limited indicating that in the case of scotch malt whisky consumers are not likely to be key to driving sustainable production with respect to barley provenance being able to claim a 100 scottish product could be a plausible commercial option for some producers to pursue in a competitive market methodologically the scale adjusted latent class model proved to be successful in uncovering preference heterogeneity and its sources in including non demanders in the analysis and in accounting for differences in scale amongst respondents

hurdle and latent class approaches to serial non participation in choice models in repeated choice modelling studies it is often the case that individuals always select the status quo option although this pattern may reflect considered choices they may also be the result of alternative decisions about whether to participate in the choice process at all alternative methods of dealing with this behaviour each with associated implications for estimates of economic values are presented in particular we consider the alternative strategies of excluding such individuals from the data using hurdle models to explicitly model this group and propose the use of latent class models to endogenously allow for different preference structures an advantage of the latent class approach is that the form of the non participation need not be defined in advance these approaches are considered using uk choice experiment data on food choices where the attributes include genetic modification of food the latent class approach reveals the presence of two forms of non participation in the data

discrete choice experiments in developing countries willingness to pay versus willingness to work a concern when conducting stated preference valuation studies in rural developing or very low income contexts is the use of monetary willingness to pay wtp estimates in circumstances where cash incomes are extremely low a significant proportion of the population are not engaged in waged labour and the exchange of goods or services is augmented through barter or work exchange the role of money is likely to be different from that within an urban developed setting as such ability to pay using money may be impaired and downwardly biased when compared with other mediums of exchange in recognition of this several studies have used hypothetical labour contributions as payment vehicles and a common finding is that households are more often willing to contribute labour than they are money in this paper we present the results of a split sample dce using money and labour contributions as payment vehicles for improved drinking water quality in kandal province cambodia we find little differences between the payment vehicles in terms of attribute non attendance marginal utilities of attributes or derived welfare values we argue that this provides support for the use of wtp in rural developing areas where there are functioning labour markets

differing degree of price flexibilities and the policy ineffectiveness proposition price regulations impart stickiness to prices the degree of response is analysed for three cpi subindex inflations freely determined regulated and mixed prices and of aggregate cpi inflation to anticipated and unanticipated monetary policies freely determined prices and aggregate cpi show similar responses but faster and larger adjustments than regulated prices to anticipated monetary policies the results imply that the extent to which monetary policies can influence prices depends on the degree of price inertia in various sectors for monetary authorities to control inflation effectively they need to focus on price movements in various sectors

lexicographic preferences in contingent valuation a theoretical framework with illustrations this paper considers some implications of l ordering an incommensurable preference model proposed in earlier cvliterature the structure and existence of inverse demand functions is shown to be a function of three elements the relationship between goods and wants wta wtp formats and the endowment of the good in a many to many relationship uncompensated and even compensated inverse demand functions may exist whereas a one to one relationship implicitly assumed in earlier literature does not necessarily produce either an illustration is provided in support of the theoretical framework especially the hypothesis that one to one relationship and high share of cv responses revealing lexicographic preferences are correlated

property rights regimes in complex fishery management systems a choice experiment application the tonle sap wetland fishery was previously divided into 3 different management zones for conservation open access fishing and private fishing rights to the private fishing zone involved auctions for exclusive rights to temporarily designated plots this paper aims to explore the auction based system by investigating how this fishery management system affects different groups of small scale fishermen and how different characteristics of the fishing lots affect the bidding a choice experiment approach was used to model fishermen s choices in a hypothetical auction market by offering fishermen the choice between purchasing different potential fishing lots and a no purchase option implying fishing only in the communal fishing grounds the preferred latent class model with two segments of fishermen showed that the bidding behavior of the more privileged group out competes the other group irrespective of the lot characteristics this result suggests that it is unlikely that the redesign of the auction system itself would be an effective way of securing access to fishing resources for the two observed groups of fishermen this implies that open access fishing grounds and or other regulations may also be needed in future management as they serve an important role for the poorer segments

disaggregate evidence on price stickiness and implications for macro models i introduction fashions that take hold of the field of macroeconomics share important characteristics with the economy its practitioners seek to understand approaches that are in vogue exhibit cycles with varying frequencies and amplitudes during the 1960s theories based on assumptions of widespread wage and price stickiness dominated the landscape the new classical macroeconomics that emerged in the 1970s challenged the preeminence of these keynesian theories and by the mid 1980s real business cycle theories assuming widespread price flexibility received a considerable portion of macroeconomists attention beginning in the early 1990s as reviewed by gordon 1990 mankiw 1990 and mankiw and romer 1991a 1991b a keynesian counterrevolution occurred and by the conclusion of the 1990s sticky price theories had regained much of their luster today as discussed by woodford 2003 price stickiness is a fundamental building block of numerous theories aimed at explaining both movements in domestic variables such as employment and real output and changes in international variables such as the trade balance and the current account there has as we discuss below been empirical work seeking to determine whether real world data might be consistent with the implications of macroeconomic theories with inflexible product prices there has been very little work however to determine whether the most influential approaches to testing the reasonableness of micro based models of price stickiness support the underlying assumption of widespread price rigidities at the micro level instead leading studies in the literature examine only aggregate data we find this quite surprising given that so many modern macroeconomic models consider economies populated with representative producers that establish an array of product prices that are fixed in the short run which in most models is commonly taken to be the current period of analysis are most product prices really sticky bils and klenow 2004 have addressed this question by studying the frequency of price adjustments for 123 categories of consumer goods and services their answer is that most prices in fact change relatively frequently with about half of prices changing roughly every 4 or 5 too although they found that the prices of certain services and what they call processed physical goods adjust more slowly their overall results offer relatively little support for sticky price models in this paper we also examine microeconomic data for the united states in contrast to bils and klenow however we examine industry level data on firm prices and costs we employ the empirical methodology proposed by the highly influential study by gali and gertler 1999 which in turn is based on the micro based analysis of imperfect competition and price stickiness proposed by calvo 1983 nevertheless our conclusions are broadly similar to those of bils and klenow overall we find that across the industries to which we are able to apply the gali gertler style approach no more than 43 of total sales are generated by industries with estimated periods of price adjustment of 6 quarters or more this percentage drops to below 23 when the discount factor is restricted to reasonable values and under these restrictions industries accounting for at least 36 of all sales in the industries we analyze have estimated price adjustment intervals of less than 2 quarters in all empirical approaches we consider unrestricted analyses producing estimates of industry specific discount factors at least 44 of total sales of the industries we consider are generated by industries with estimated price adjustment speeds of less than 1 yr furthermore in most specifications the unweighted average price adjustment interval for all industries is below 1 yr and the weighted average using industry shares of total sales as weights price adjustment interval for all specifications ranges from no higher than 3

how do respondents process stated choice experiments attribute consideration under varying information load the popularity of stated choice sc experiments has produced many design strategies in which researchers use increasingly more complex choice settings to study choice behaviour when the amount of information to assess increases we wonder how an individual handles such information in making a choice defining the amount of information as the number of attributes associated with each choice set we investigate how this information is processed as we vary its complexity four ordered heterogeneous logit models are developed each for an sc design based on a fixed number of attributes in which the dependent variable defines the number of attributes that are ignored we find that the degree to which individuals ignore attributes is influenced by the dimensionality of the sc experiment the deviation of attribute levels from an experienced reference alternative the use of adding up attributes where feasible the number of choice sets evaluated and the personal income of the respondent the empirical evidence supports the view that individuals appear to adopt a range of coping strategies that are consistent with how they process information in real markets and that aligning choice complexity with the amount of information to process is potentially misleading relevancy is what matters copyright 2006 john wiley sons ltd

communication commitment and growth abstract we study the effect on the growth of an economy of alternative financing opportunities in a stochastic growth model with incentive constraints efficient accumulation mechanisms are designed and computed for economies that differ in their incentive structure we show that when borrowing is subject to information constraints there is a computable efficient transfer mechanism that does not affect capital accumulation and investment patterns even though consumption patterns and the distribution of wealth are affected in contrast enforcement constraints can severely reduce the outside financing opportunities and affect investment patters and economic growth we adapt numerical algorithms for obtaining numerical solutions of these models

the equivalence of lending equilibria and signalling based insurance under asymmetric information i present a model in which a continuum of individuals have stochastic idiosyncratic income shocks complete insurance is physically feasible but unattainable due to an information asymmetry income shocks are observable only by the individuals receiving them any insurance institution must therefore rely on self reporting of income innovations two ways of achieving incentive compatible self reporting are presented the first is a debt market with an explicit lending restriction the second is an insurance contract that linearly filters a signal transmitted by individuals the two are then demonstrated to be identical equilibrium consumption fluctuates in a random walk which is inefficient given the physical potential for complete insurance but is efficient given the information constraints the results are complementary to those of green 1987 but permit more general stochastic processes of income to be analyzed serial correlation of income reduces the efficiency of the insurance

full insurance in the presence of aggregate uncertainty this paper tests implications of full consumption insurance the object is to determine how much mileage can be obtained from a model with complete markets with such features as private information or liquidity constraints omitted the implication exploited is that individual consumption responds to aggregate risk but not to idiosyncratic risk the test involves regressing the change in household consumption onto the change in aggregate consumption and other right hand side variables such as the change in household income and change in employment status all variables other than the change in aggregate consumption are predicted to be insignificant in explaining the change in household consumption with observations on consumption and income for 10 695 households from the consumer expenditure survey the results are mixed the results for one specification exponential utility are mostly consistent with full consumption insurance the results for the other specification power utility are not

has greater competition restrained u s inflation this paper shows how increased goods market competition affects the behavior of inflation in a multisector economy by raising the price elasticity of demand increased goods market competition theoretically lowers inflation and makes the aggregate price level less sensitive to aggregate demand shocks we find that proxies for the aggregate degree of goods market competition are statistically and economically significant in short run phillips curve models of core inflation evidence indicates that heightened goods market competition has flattened the slope of the short run expectations augmented phillips curve and slightly lowered the nonaccelerating inflation rate of unemployment nairu

contracts constraints and consumption the paper compares implications of three kinds of models of households consumption behaviour the basic permanent income model several models of liquidity constrained households and a model of an informationally constrained efficient contract these models are distinguished in terms of implications regarding the present discounted values of net trades to households at various levels of temporary income and the households marginal rates of substitution martingale consumption is studied as an approximation to the predicted consumption process of the efficient contract model

on efficient distribution with private information this paper is a study of the dynamics of the efficient distribution of consumption in an exchange economy with many consumers each of whom is subject to private idiosyncratic taste shocks we propose a recursive method for finding feasible allocations that are incentivecompatible and that are pareto optimal within this set the method is applied to several parametric examples we find that in an efficient allocation the degree of inequality continually increases with a diminishing fraction of the population receiving an increasing fraction of the resources we discuss the extent to which these allocations can be decentralized via market arrangements this paper is a study of the dynamics of the efficient distribution of consumption in an exchange economy with private information the economy we study has a constant endowment flow of a single non storable consumption good which is to be allocated each period among a large number of consumers each period these consumers experience unpredictable idiosyncratic privately observed taste shocks affecting their marginal utility of current consumption efficiency dictates that more resources be allocated to those consumers who in any given period have a high marginal utility of current consumption

the self selection of complexity in choice experiments we investigate whether individuals will voluntarily increase the complexity of the tasks they complete within a discrete choice experiment dce we do this via a self selection of complexity design in which respondents choose whether to face choice sets comprising 3 4 or 6 alternatives we link this approach with the emerging excessive choice effect ece literature we find that 30 of the sample opt for the largest sets we test whether this choice of complexity reveals information about respondents capability commitment we find that it does since those with lowest initial error variance levels are most likely to later select the highest level of task complexity we argue that this result offers insights regarding the design of more cognitively efficient dce designs we consider the matching of respondents to the appropriate level of task complexity as analogous to the principal agent problem with asymmetric information rather than trying to understand respondents cognitive capability or commitment ex ante we propose that participants self select designs that achieve the researcher s objective of minimizing error variance copyright 2012 oxford university press

the spillover effects of nominal wage rigidity in a multisector economy note although western economies are composed of markets with differing degrees of wage price stickiness most analytical macromodels are not composed of distinct sectors arld do not attempt to analyze how different sectors respond to policy actions and supply or demand shocks blinder and mankiw 1984 investigate how macropolicies and shocks affect a multicontract archipelago economy composed of five sectors islands each characterized by different wage price behavior they convincingly demonstrate how heterogeneous markets pose aggregation problems for policy makers and econometricians because each market reacts differently to common shocks however the blinder mankiw model is not really a model of an economy composed of integrated heterogeneous markets their archipelago model assumes that the workers in each sector island consume only the product produced in their sector a more realistic and analytically more appealing model would integrate the sectors by having each worker consume the same basket of heterogeneous goods under these circumstances conditions in one sector which affect the price of that sector s output can affect wage demands i e labor supply in another sector and thereby the output of this other sector through this channel wage price stickiness in one sector allows aggregate demand policy and shocks to have real effects on a sector with perfectly flexible sectoral wages and prices this result does not occur in the blinder mankiw model because it lacks this type of cpi labor supply linkage between sectors in fact these spillover effects have not been directly addressed by the existing literature for purposes of brevity only aggregate demand shocks will be considered in a closed economy consisting of only two sectors one having goods and labor markets which clear instantaneously henceforth the classical or walrasian sector and the

does contractual wage rigidity play a role in determining real activity interest in nominal wage ridigity as a source of macroeconomic fluctuations has waxed and waned over the past half century the most recent wave of interest was triggered by the rational expectations revolution of the 1970s which inspired an improved sticky wage paradigm the paradigm posits the existence of short term contractual arrangements that in their simplest form fix wage schedules in nominal terms for a predetermined period the life of the contract and leave employment at the discretion of the firm the most influential examples of the paradigm incorporate rational expectations and satisfy the natural rate hypothesis 9 14 thus meeting the new minimum standards for demand driven theories of the business cycle nominal wage contracting models have been vigorously criticized for both a lack of theoretical rigor and an absence of empirical support despite their critics however the models have remained a popular analytical tool and after almost a decade of inattention economists are showing a renewed interest in empirical tests of nominal contracting models the studies produced to date are small in number and offer conflicting conclusions they are perhaps as important for the objections they provoke as for the answers they provide while the work reported in this paper

skew and attribute non attendance within the bayesian mixed logit model abstract we investigate non attendance to choice set attributes and the accommodation of preference heterogeneity within the mixed logit model we propose a generalisation of the mixed logit enabling the degree of skew of marginal utility distributions to be estimated the implementation is bayesian with the marginal likelihood used as an arbiter of model performance we find strong evidence of skew in the distributions of marginal utilities for most attributes models incorporating skew are preferred in all cases the irrelevance of an attribute to significant numbers of respondents is a possible cause of such skew we test alternative empirical accommodations of self reported attribute non attendance ana and continue to find strong evidence of skew in the distributions of marginal utilities even having accounted for ana we find that contrary to some recent findings respondents who report having ignored an attribute typically do indeed have a zero marginal utility for that attribute

stochastic turnpike property and stationary equilibrium abstract i study the stability properties of a stochastic equilibrium growth model with a finite number of infinitely lived consumers the exogenous stochastic environment is represented by a stationary stochastic process that influences preferences technology and primary resources consumers maximize the expected sum of discounted utilities production is intertemporal and primary resources are assumed to be necessary for the production of capital goods by adapting standard assumptions in general equilibrium theory and turnpike theory i show that if consumers have homogeneous discount factors close enough to one the allocation of an interior equilibrium converges to the allocation of a stationary equilibrium with transfer payments this result is used to prove the existence of a stationary equilibrium

the influence of task complexity on consumer choice a latent class model of decision strategy switching the literature indicating that person context and task specific factors cause consumers to utilize different decision strategies has generally failed to affect the specification of choice models used by practitioners and academics alike who still tend to assume an utility maximizing omniscient indefatigable consumer this article 1 introduces decision strategy selection within a maintained compensatory framework into aggregate choice models via latent classes which arise because of task complexity 2 it demonstrates that within an experimental choice task the model reflects changing aggregate preferences as choice complexity changes and as the task progresses the import of these findings for current practice model interpretation and future research needs is examined

causes and consequences of lexicographic choices in stated choice studies abstract stated choice sc methods and other choice experiments are now becoming increasingly popular for the valuation of environmental goods this paper shows that lexicographic choices lcs in an sc task or other types of choice experiments do not imply that the respondent has lexicographic preferences lcs may be a result of i study designs where differences between the alternatives are too great and ii simplification of the choice task a traditional approach that investigates motives for lexicographic choices mainly as a result of lexicographic preferences may therefore fail to reveal the whole motive range study designs that cause lcs whether such choices actually are based on non compensatory choices i e genuine lexicographic preferences or strategic behaviour or compensatory choices provide less information about preferences however providing they are not totally dominant such choices are not normally a serious modeling problem it is argued that simplification is a consequence of respondents differing abilities to choose such lcs contribute to the larger variances of sc data relative to less cognitively demanding valuation methods and might therefore have a significant impact on the implied valuation of non market goods if they are not handled in the analysis in data collection we should use survey designs that collect more signals and less noise and in data analysis we should use models that can separate signals from noise however there is obviously a limit to the amount of noise which can be separated from signals in a model and therefore how much noise such models can tolerate and still produce useful valuation estimates for the goods under consideration for further investigation of such limits a direct test procedure that can investigate whether each respondent has completed the task in a compensatory manner like the one presented in the current study is valuable

debt constrained asset markets we develop a theory of general equilibrium with endogenous debt limits in the form of individual rationality constraints similar to those in the dynamic consistency literature if an agent defaults on a contract he can be excluded from future contingent claims markets trading and can have his assets seized he cannot be excluded from spot markets trading however and he has some private endowments that cannot be seized all information is publicly held and common knowledge and there is a complete set of contingent claims markets since there is complete information an agent cannot enter into a contract in which he would have an incentive to default in some state in general there is only partial insurance variations in consumption may be imperfectly correlated across agents interest rates may be lower than they would be without constraints and equilibria may be pareto ranked