Estimating a model of forward-looking behavior with discrete choice experiments: The case of lifetime hunting license demand

Sales of deer licenses, one of the most important revenue sources for wildlife management at the Indiana Department of Natural Resources (IDNR), have been declining for a decade. To increase its revenue, the IDNR is considering introducing a new lifetime deer license for sale. This license would allow hunters to harvest deer (and possibly other species) each year for the rest of their lives in exchange for a relatively large up-front fee. The forward-looking nature of the decision to buy a lifetime license means hunters' choice behavior is necessarily dynamic. Prior work estimates preferences for long-lived, durable goods using standard discrete choice experiments underpinned by static models. We derive a dynamic discrete choice model of lifetime license purchases. Our model informs the design of a novel, dynamic discrete choice experiment, generating data that allows us to consistently estimate individuals' forward-looking preferences for lifetime hunting licenses. We use our model to estimate the price of lifetime licenses that maximizes IDNR revenues.

Automated summary

Sales of deer licenses have been declining for a decade in Indiana, prompting the Department of Natural Resources to consider introducing a lifetime deer license. This license would allow hunters to hunt deer (and possibly other species) each year for their lifetime in exchange for an upfront fee. Previous research has focused on static models to estimate preferences for durable goods, but we develop a dynamic discrete choice model to inform the design of a novel, dynamic discrete choice experiment that consistently estimates individuals' forward-looking preferences for lifetime hunting licenses. This model is then used to estimate the price of lifetime licenses that maximizes IDNR revenues.