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# Discrete Choice Models and Consumer Behavior

2022/2023
ENG
Instruction in English
5
ECTS credits
Course type:
Elective course
When:
4 year, 1 module

### Course Syllabus

#### Abstract

The discipline "Discrete Choice Models and Consumer Behavior" is intended to teach specialists in the field of empirical evaluation of systems of demand functions. Correct estimation of demand systems is important for improving decision making both at the level of an individual firm (what prices for goods to set?) and at the level of a market regulator (to allow a merger of firms or not?). In the course, we will consider both the classical approach based on the theory of a representative consumer, and the more modern approach based on discrete choice models that has gained popularity over the past 30 years. In this modern and rather realistic approach, it is assumed that consumers are heterogeneous, the number of consumers is very large, but each individual consumer makes a choice only from a finite number of alternatives (chooses which product to buy). In addition to lectures, seminars and tests, the course includes homework in Python.

#### Learning Objectives

• introduce students to modern methodology and tools for estimating demand functions
• give an introduction to the field of structural econometrics
• improve the general econometric culture of students

#### Expected Learning Outcomes

• obtaining theoretical knowledge in the field of classical and modern approaches to estimating systems of demand functions
• mastering a modern approach to estimating systems of demand functions in practice

#### Course Contents

• Part 1. Representative consumer (Approach 1)
• Part 2. Discrete Choice (Approach 2)

#### Assessment Elements

• Test 1
closed-book
• Test 2
closed-book
• Homework
second part of the course

#### Interim Assessment

• 2022/2023 1st module
0.4 * Test 2 + 0.2 * Homework + 0.4 * Test 1

#### Recommended Core Bibliography

• Discrete choice methods with simulation, Train, K.E., 2009
• Steven T. Berry. (1994). Estimating Discrete-Choice Models of Product Differentiation. RAND Journal of Economics, (2), 242. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.rje.randje.v25y1994isummerp242.262