Knowledge that Transforms

Ti-H CONCERN of this paper is the estimation of the parameters of a probabilistic choice model when choices rather than decision makers are sampled. Existing estimation methods presuppose an exogeneous sampling process, that is one in which a sequence of decision makers are drawn and their choice behaviors observed. In contrast, in choice based sampling processes, a sequence of chosen alternatives are drawn and the characteristics of the decision makers selecting those alternatives are observed. The problem of estimating a choice model from a choice based sample has suibstantive interest because data collection costs for such processes are often considerably smaller than for exogeneous sampling. Particular instances of this differential occur in the analysis of transportation behavior. For example, in studying choice of mode for work trips, it is often less expensive to survey transit users at the station and auto users at the parking lot than to interview commuters at their homes. Similarly, in examining choice of destination for shopping trips, surveys conducted at various shopping centers offer significant cost savings relative to home interviews.2 While interest in transportation applications provided the original motivation for our work, it has become apparent that choice based sampling processes can be cost effective in the analysis of numerous decision problems. In particular, wherever decision makers are physically clustered according to the alternatives they select, choice based sampling processes can achieve economies of scale not available with exogeneous sampling. Some non-transportation decision problems in which decision makers do cluster as described include the schooling decisions of students, the job decisions of workers, the medical care decisions of patients and the residential location decisions of households. Realization of the sampling cost benefits of choice based samples presupposes of course that the parameters of the underlying choice model can logically be inferred from such samples and that a tractable estimator with desirable statistical properties can be found. We shall, in this paper, confirm the logical supposition, develop a suitable estimator, and characterize the behavior of existing, exogeneous sampling, estimators in the context of choice based samples. An outline of the presentation and summary of major results follows.

[This paper describes a decentralized planning procedure which converges to a global optimum--as seen by a central planning board--whether or not the production possibility sets of the firms are convex. All information is exchanged in the form of quantities: the planning board proposes quotas and the firms respond with feasible production programs.]

[Research on the spatial firm has shown that spatial results often differ from non-spatial. This paper considers the relationship between the price of a spatial monopoly and the price of a spatially competitive firm. The conditions under which the competitive price will exceed the monopoly price are outlined.]

[The paper analyzes borrowing and lending on uncertain future income, with a positive probability of bankruptcy. Creditor and debtor play a strategic game, in which it is shown that optimal creditor behavior is not generally well defined. The model suggests that under uncertainty the availability of credit may be restricted below that which would be predicted by classical microeconomic theory.]

This paper surveys some recent studies of economies where trading takes place sequentially over time, and where each agent makes decisions at every date in the light of his expectations about his future environment, which are functions of his information on the present and past states of the economy. The paper reviews particularly the issues raised by arbitrage in capital markets, by the consideration of money and banking activities, and by the introduction of production in temporary competitive equilibrium models. A thorough investigation of the logic of temporary equilibrium models with quantity rationing is also offered, as well as a quick review of the study of stochastic processes of temporary equilibria.

[The finite sample behavior in a dynamic, simultaneous system of least squares and instrumental variables estimators which allow for autoregressive errors is studied by control variable (CV) simulation. To increase simulation precision, the CV's are based on asymptotic approximations to the econometric estimators and so have the same asymptotic distributions, but known finite sample moments. The CV formulae also clarify the properties of the econometric techniques and combined with response surfaces, reduce the specificity of simulation findings. The results confirm the value of asymptotic theory and show that the autoregressive instrumental variables estimator provides a reasonable approach to the simultaneity-autocorrelation-dynamics interaction.]

E. B. Keeler, J. P. Newhouse, C. E. Phelps, Deductibles and the Demand for Medical Care Services: The Theory of a Consumer Facing a Variable Price Schedule under Uncertainty, Econometrica, Vol. 45, No. 3 (Apr., 1977), pp. 641-656

[Social choice lottery rules are analyzed for two-candidate elections with voters who may be uncertain about whom they prefer. A voter's uncertainty is reflected by a nonobservable choice probability of voting for candidate A rather than candidate B, given that he votes. Lottery rules are based on the votes for A and B; they are to be monotonic and symmetric in voters and in candidates. Given n voters, all lottery rules are convex combinations of about n/2 basic rules ranging from the coin-flip rule to simple majority. Candidate A's win probability and two measures of expected voter satisfaction are examined as functions of the individuals' choice probabilities and the lottery rules. Comparisons are made between simple majority and the proportional lottery rule which assigns social choice probability of j/n to A when A gets j of n votes. Each of simple majority and the proportional lottery rule satisfies attractive properties that are not satisfied by the other rule.]