Identification of Counterfactuals in Dynamic Discrete Choice Models

Myrto Kalouptsidi, Paul Scott and Eduardo Souza-Rodrigues

No 21527, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Dynamic discrete choice (DDC) models are not identified nonparametrically, but the non-identification of models does not necessarily imply the non-identification of counterfactuals. We derive novel results for the identification of counterfactuals in DDC models, such as non- additive changes in payoffs or changes to agents' choice sets. In doing so, we propose a general framework that allows the investigation of the identification of a broad class of counterfactuals (covering virtually any counterfactual encountered in applied work). To illustrate the results, we consider a firm entry/exit problem numerically, as well as an empirical model of agricultural land use. In each case, we provide examples of both identified and non-identified counterfactuals of interest.

JEL-codes: C5 Q1 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-dcm
Note: EEE EH IO LS
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Citations: View citations in EconPapers (16)

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