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Estimating Internet Users' Demand Characteristics

Author

Listed:
  • Mingzhi Li

    (University of Texas at Austin)

  • Alok Gupta

    (University of Connecticut)

  • Boris Jukic

    (George Mason University)

  • Dale O. Stahl

    (University of Texas at Austin)

  • Andrew B. Whinston

    (University of Texas at Austin)

Abstract

In this paper we investigate two parametric approaches and one non-parametric approach to estimating Internet users' value of time, an important characteristic of demand for Internet services. The advantages of these approaches are brought out, and the limitations are discussed. The models are tested using data generated from our simulation model of the Internet economy. First, we set up parametric count-data models given the characteristics of the data. While reasonably good results are obtained on all medium and large sized jobs, the method fails on small sized jobs. Second, we develop a nonparametric quasi-Bayesian update algorithm of retrieving the underlying distribution function of Internet users' value of time purely from observations of their choices. Compared with the parametric count data models, good results are obtained on all jobs.

Suggested Citation

  • Mingzhi Li & Alok Gupta & Boris Jukic & Dale O. Stahl & Andrew B. Whinston, 1999. "Estimating Internet Users' Demand Characteristics," Computing in Economics and Finance 1999 523, Society for Computational Economics.
    • Handle: RePEc:sce:scecf9:523
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    References listed on IDEAS

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    1. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    2. Gupta, Alok & Stahl, Dale O. & Whinston, Andrew B., 1997. "A stochastic equilibrium model of internet pricing," Journal of Economic Dynamics and Control, Elsevier, vol. 21(4-5), pages 697-722, May.
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    Cited by:

    1. Dale O. Stahl, 2002. "The Inefficiency of First and Second Price Auctions in Dynamic Stochastic Environments," Netnomics, Springer, vol. 4(1), pages 1-18, March.
    2. Yezekael Hayel & Mohamed Ouarraou & Bruno Tuffin, 2007. "Optimal Measurement-based Pricing for an M/M/1 Queue," Networks and Spatial Economics, Springer, vol. 7(2), pages 177-195, June.
    3. Rajeev Goel & Edward Hsieh & Michael Nelson & Rati Ram, 2006. "Demand elasticities for Internet services," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 975-980.

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