NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Joint Identification of Utility and Discount Functions From Stated Choice Data: An Application to Durable Goods Adoption

Jean-Pierre H. Dube, Günter J. Hitsch, Pranav Jindal

NBER Working Paper No. 18393
Issued in September 2012
NBER Program(s):   IO

We present a survey design that generalizes static conjoint experiments to elicit inter-temporal adoption decisions for durable goods. We show that consumers’ utility and discount functions in a dynamic discrete choice model are jointly identified using data generated by this specific design. In contrast, based on revealed preference data, the utility and discount functions are generally not jointly identified even if consumers’ expectations are known. The separation of current-period preferences from discounting is necessary to forecast the diffusion of a durable good under alternative marketing strategies. We illustrate the approach using two surveys eliciting Blu-ray player adoption decisions. Both model-free evidence and the estimates based on a dynamic discrete choice model indicate that consumers make forward-looking adoption decisions. In both surveys the average discount rate is 43 percent, corresponding to a substantially higher degree of impatience than the rate implied by aggregate asset returns. The estimates also reveal a large degree of heterogeneity in the discount rates across consumers, but only little evidence for hyperbolic discounting.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18393

Users who downloaded this paper also downloaded these:
Fernandez-Villaverde, Guerrón-Quintana, and Rubio-Ramírez w18399 Estimating Dynamic Equilibrium Models with Stochastic Volatility
Greenstone, List, and Syverson w18392 The Effects of Environmental Regulation on the Competitiveness of U.S. Manufacturing
Gourinchas and Rey From World Banker to World Venture Capitalist: U.S. External Adjustment and the Exorbitant Privilege
Gowrisankaran and Rysman w14737 Dynamics of Consumer Demand for New Durable Goods
Hamilton w16790 Historical Oil Shocks
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us