The Logit Model in Economics |
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Authors: | JS Cramer G Ridder |
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Institution: | Stichting voor Economisch Onderzoek Jodenbreestraat 23 NL-1011 NH Amsterdam The Netherlands;Faculteit der Economische Wetenschappen Rijksuniversiteit Groningen Vakgroep Econometrie Postbus 800 NL-9700 AV Groningen The Netherlands |
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Abstract: | This paper reviews aspects of the application of logit models in economics. We consider some economic models that lead to a simple or a multinomial logit specification. A detailed account is given of the possible specifications of the multinomial model. We stress the relationship between distributional assumptions and functional form assumptions. Some (mis)specification tests with individual data are discussed. Moreover, we present a new test. We also consider grouping of continuously recorded data, and the biases introduced by an inappropriate grouping. |
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Keywords: | discrete choice multinomial logit specification tests |
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