Working Paper: CEPR ID: DP7030
Authors: Asher Blass; Saul Lach; Charles Manski
Abstract: When data on actual choices are not available, researchers studying preferences sometimes pose choice scenarios and ask respondents to state the actions they would choose if they were to face these scenarios. The data on stated choices are then used to estimate random utility models, as if they are data on actual choices. Stated choices may differ from actual ones because researchers typically provide respondents with less information than they would have facing actual choice problems. Elicitation of choice probabilities overcomes this problem by permitting respondents to express uncertainty about their behavior. This paper shows how to use elicited choice probabilities to estimate random utility models with random coefficients and applies the methodology to estimate preferences for electricity reliability in Israel.
Keywords: choice probabilities; stated choices; willingness to pay for electricity reliability
JEL Codes: C2; C25; C42; D12; L51; L94
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| eliciting choice probabilities (C25) | more accurate estimate of consumer preferences for electricity reliability (L97) |
| incomplete information (D89) | discrepancies between stated and actual choices (D91) |
| eliciting choice probabilities (C25) | capturing uncertainty in decision-making (D80) |
| elicited choice probabilities (C25) | more informative data for estimating random utility model (C25) |
| better understanding of consumer valuation of electricity reliability (L97) | better estimation of willingness to pay for reduced electricity outages (L97) |