DECONVOLUTING PREFERENCES AND ERRORS: A SEMI-NONPARAMETRIC MODEL FOR BINOMIAL PANEL DATA

Let U be an unobserved random variable with compact support and let ǫt be unobserved i.i.d. random symmetric errors also with compact support. Observe the random variables Vt and Yt = 1{U + ǫt < Vt}, t ≤ T , such that the support of V comprises the support of U + ǫt. This type of model is relevant for many stated choice experiments. It is shown that the distributions of U and ǫ can be consistently estimated using semi-nonparametric maximum likelihood. The model is applied to simulated data and to actual data designed for assessing the willingness-to-pay for travel time savings.

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