DRAFT

Ulric B. and Evelyn L. Bray Social Sciences Seminar

Wednesday, April 13, 2022
4:00pm to 5:00pm
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Baxter Lecture Hall
Does Harold Zurcher Have Time Separable Preferences?
Yi Xin, Assistant Professor of Economics, Caltech,

Abstract: We propose an empirical model of dynamic discrete choices with Epstein-Zin preferences, generalizing the well-known Rust model.  Based on the Bellman equation with Epstein-Zin preferences, we show the existence and uniqueness of the value function under the assumption of a preference for early resolution of uncertainty. We apply the framework to the bus engine replacement data and illustrate the proposed simulation method for estimation. We could reject the null hypothesis that Harold Zurcher has the time separable preferences. 

Written with Jay Lu, Yao Luo, and Kota Saito

For more information, please contact Letty Diaz by phone at 626-395-1255 or by email at letty.diaz@caltech.edu.