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Discrete Choice Estimation of Time Preferences

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  • Jose Apesteguia
  • Miguel Angel Ballester

Abstract

Discrete choice methods are often used for the estimation of time preferences. We show that these methods have pervasive problems when based on random utility models, for which cases our results establish that the probability of selecting a later option over an earlier one may be greater for higher levels of impatience. This could have profound implications, not only in the experimental estimation of time preferences, but also in a wide variety of empirical papers using such models in dynamic settings. Alternatively, we also show that discrete choice methods built on random preference models are always free of all such problems.

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  • Jose Apesteguia & Miguel Angel Ballester, 2014. "Discrete Choice Estimation of Time Preferences," Working Papers 787, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:787
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    1. Jose Apesteguia & Miguel A. Ballester, 2014. "Discrete choice estimation of risk aversion," Economics Working Papers 1443, Department of Economics and Business, Universitat Pompeu Fabra.

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    More about this item

    Keywords

    discrete choice; structural estimation; time; discounting; random utility models; random preference models;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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