EconPapers    
Economics at your fingertips  
 

Identification of Dynamic Discrete Choice Models with Hyperbolic Discounting Using a Terminating Action

Chao Wang (), Stefan Weiergraeber () and Ruli Xiao ()
Additional contact information
Chao Wang: Indiana University, Department of Economics
Stefan Weiergraeber: Indiana University, Department of Economics
Ruli Xiao: Indiana University, Department of Economics

CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: We study the identification of dynamic discrete choice models with hyperbolic discounting using a terminating action. We provide novel identification results for both sophisticated and naive agents’ discount factors and their utilities in a finite horizon framework under the assumption of a stationary flow utility. In contrast to existing identification strategies we do not require to observe the final period for the sophisticated agent. Moreover, we avoid normalizing the flow utility of a reference action for both the sophisticated and the naive agent. We propose two simple estimators and show that they perform well in simulations.

Keywords: hyperbolic discounting; dynamic discrete choice model; identification (search for similar items in EconPapers)
Pages: 45 pages
Date: 2022-06
New Economics Papers: this item is included in nep-dcm, nep-ecm and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://caepr.indiana.edu/RePEc/inu/caeprp/CAEPR2022-010.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inu:caeprp:2022010

Access Statistics for this paper

More papers in CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington Contact information at EDIRC.
Bibliographic data for series maintained by Center for Applied Economics and Policy Research ().

 
Page updated 2022-07-30
Handle: RePEc:inu:caeprp:2022010