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 and Pranav Jindal

No 18393, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: C14 D12 D9 M31 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-dcm and nep-upt
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Quantitative Marketing and Economics December 2014, Volume 12, Issue 4, pp 331-377 Date: 10 Sep 2014 The Joint identification of utility and discount functions from stated choice data: An application to durable goods adoption Jean-Pierre Dubé, Günter J. Hitsch, Pranav Jindal

Downloads: (external link)
http://www.nber.org/papers/w18393.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:nbr:nberwo:18393

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18393

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().