Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222113 
Year of Publication: 
2019
Series/Report no.: 
Discussion Paper No. 216
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
The adoption decision for durable goods is intertemporal by definition. However, estimating utility and discount functions from revealed preference data using dynamic discrete choice models is difficult because of an inherent identification problem. To overcome this issue, we use stated preference data. Specifically, we employ the experimental design of Dubé, Hitsch, and Jindal (2014), where future prices are known and that elicits intertemporal adoption decisions for Bluetooth speakers in a discrete choice framework. We estimate several models of discounting (e.g., static, myopic, geometric, and quasi-hyperbolic) and find considerably lower discount factors than typical market interest rates would suggest. The values are also smaller compared to respondents' matching-based discount factors, even though the correlation is positive and significant. Furthermore, there are substantial differences in discounting across respondents (i.e., heterogeneity in time-preferences) and lastly, there is no strong empirical evidence for quasi-hyperbolic discounting. Thus, the standard economic model seems to be appropriate for the data at hand.
Subjects: 
Intertemporal preferences
Dynamic discrete choice models
Durable goods adoption
JEL: 
C35
D9
D12
M31
Document Type: 
Working Paper

Files in This Item:
File
Size
428.59 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.