Entropy methods for identifying hedonic models

Arnaud Dupuy, Alfred Galichon, Marc Henry

    Research output: Contribution to journalArticle

    Abstract

    This paper contributes to the literature on hedonic models in two ways. First, it makes use of Queyranne’s reformulation of a hedonic model in the discrete case as a network flow problem in order to provide a proof of existence and integrality of a hedonic equilibrium and efficient computation of hedonic prices. Second, elaborating on entropic methods developed in Galichon and Salanié (Cupid’s invisible hand: social surplus and identification in matching models. Working Paper, 2014), this paper proposes a new identification strategy for hedonic models in a single market. This methodology allows one to introduce heterogeneities in both consumers’ and producers’ attributes and to recover producers’ profits and consumers’ utilities based on the observation of production and consumption patterns and the set of hedonic prices.

    Original languageEnglish (US)
    Pages (from-to)405-416
    Number of pages12
    JournalMathematics and Financial Economics
    Volume8
    Issue number4
    DOIs
    StatePublished - 2014

    Fingerprint

    Entropy Method
    Model Matching
    Network Flow Problem
    Integrality
    Reformulation
    Profit
    Attribute
    Model
    Methodology
    Entropy
    Hedonic model
    Hedonic prices

    Keywords

    • Generalized entropy
    • Hedonic equilibrium
    • Single market identification

    ASJC Scopus subject areas

    • Finance
    • Statistics and Probability
    • Statistics, Probability and Uncertainty

    Cite this

    Entropy methods for identifying hedonic models. / Dupuy, Arnaud; Galichon, Alfred; Henry, Marc.

    In: Mathematics and Financial Economics, Vol. 8, No. 4, 2014, p. 405-416.

    Research output: Contribution to journalArticle

    Dupuy, Arnaud ; Galichon, Alfred ; Henry, Marc. / Entropy methods for identifying hedonic models. In: Mathematics and Financial Economics. 2014 ; Vol. 8, No. 4. pp. 405-416.
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