Working Papers 2002 – Abstracts
The DOGEV Model
Tim R.L. Fry and Mark N. Harris
At present, there appears to be no qualitative dependent model that can
simultaneously account for data sets in which the variable of interest
is potentially ordered but also has strong heterogeneity of the observed
outcomes. This heterogeneity of particular outcomes, inherently attracts
individuals to them, in addition to that determined by the individual's
observed characteristics. An example of such unobserved heterogeneity
would be brand-loyalty (or "captivity") in a model of consumer choice.
Such heterogeneity of the outcomes, may well result in a pronounced multi-modal
distribution of the variable of interest. This paper introduces the Dogit
Ordered Generalized Extreme Value (DOGEV) model, which does account for
both ordering and captivity (and/or multiple modes) in the data. In the
spirit of Manski (1977), the DOGEV model combines a model for choice set
generation with the Ordered Generalized Extreme Value model. We illustrate
the model using three different empirical examples: a model of employment
contract types; an inflationary expectations data set and; a survey of
students' evaluations of teaching. These three examples are chosen as
they represent different values that the additional ancillary parameters
are likely to take in practice.
Keywords: Generalized extreme value; choice set generation; ordinal
data.
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