ESTIMATING DYNAMIC DISCRETE CHOICE MODELS WITH HYPERBOLIC DISCOUNTING, WITH AN APPLICATION TO MAMMOGRAPHY DECISIONS

Hanming Fang and Yang Wang

International Economic Review, 2015, vol. 56, issue 2, 565-596

Abstract: We extend the semiparametric estimation method for dynamic discrete choice models using Hotz and Miller's (Review of Economic Studies 60 (1993), 497–529) conditional choice probability approach to the setting where individuals may have hyperbolic discounting time preferences and may be naive about their time inconsistency. We illustrate the proposed identification and estimation method with an empirical application of adult women's decisions to undertake mammography to evaluate the importance of present bias and naivety in the underutilization of this preventive health care. Our results show evidence for both present bias and naivety.

Date: 2015
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https://doi.org/10.1111/iere.12115

Related works:
Working Paper: Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions (2010)
Working Paper: Estimating Dynamic Discrete Choice Models with Hyperbolic Discounting, with an Application to Mammography Decisions (2010)
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