RE: st: nested logit tree

["Alvarez,Sergio" <sergioal@ufl.edu>]

Makes sense.  Check this website:
http://www.stata.com/support/faqs/stat/nlogit.html
It's an example using the restaurant.dta file.

I think you want to have the R&D vs. no R&D choice in the 'type' 
category in the example.  Then you have 4 choices in the lower branch, 
but only two for each nest:

                             All firms
             R&D               vs.           no R&D
buy with R&D | sell with R&D        buy no R&D | sell no R&D

And then you have a dummy variable that indicates the actual choice.

The trick is that you need the 4 observations for each firm, so if you 
don't yet have them you need to find a way to create them.  I did it 
using the -reshape- command, but it depends on how your dataset is 
structured.

Sorry if I'm being unclear, it just challenging to explain this.

Sergio

On Mon, 28 Nov 2011 17:33:59 +0100, Solon Moreira wrote:
> Hi Sergio,
>
> Thanks for your email. In fact I want a decision model that has 4
> possible outcomes: a buyer with R&D, a buyer without R&D, a supplier
> with R&D and a supplier without R&D. So in the end I have 4 possible
> alternatives in my data. I had a look in the restaurant data, but it
> is not exactly what I want, I think I need 2 levels. I could also
> calculate different logit models but I am not sure that is the best
> solution. I am expecting that the effect of some of my covariates 
> will
> have a different direction in affecting the likelyhood of a firm
> having R&D or not depending on the side of the market that it it
> (buyer of supplier).
>
> Thanks,
> Solon
>
> ________________________________________
> From: owner-statalist@hsphsun2.harvard.edu
> [owner-statalist@hsphsun2.harvard.edu] On Behalf Of Alvarez,Sergio
> [sergioal@ufl.edu]
> Sent: Monday, November 28, 2011 5:02 PM
> To: statalist@hsphsun2.harvard.edu
> Subject: Re: st: nested logit tree
>
> Solon,
>
> I may be misunderstanding, but it looks like you want to model a
> decision which has only two possible outcomes: firm is a supplier or
> firm is a buyer.  If that is the case, you probably should use a 
> probit
> or logit rather than a nested logit.
> You can also model whether the firm has an R&D department (yes or no)
> using a similar approach.
>
> The nested and conditional logits are used when you have an agent (a
> firm) making a choice among many alternatives (more than two).
>
> Take a look at the restaurant.dta sample dataset and the nlogit help
> file and it will become clear.
>
> Best,
>
> Sergio
>
> On Mon, 28 Nov 2011 14:39:19 +0100, Solon Moreira wrote:
> > Dear Stata list readers,
> >
> > This is a question regarding the way that I should structure the 
> > tree
> > of a nested logit model to get the right output.
> >
> > I have a dataset consisting of 1200 firms that buy and sell
> > technologies. I am trying to run a model in which in the first level
> > I
> > can observe how firm-specific variables affect the likelihood of
> > being
> > a supplier instead of a buyer. The way that my model is structured
> > now
> > this part of the nest is shown in my stata output with no problem.
> > However, I am having problem with my second level, I would like the
> > output to show how some alternative specific variables affect the
> > likelihood that buyers and suppliers will have an R&D department. 
> > So,
> > I want to produce an output in which the first level explains the
> > likelihood of being a buyer or a supplier and second level the
> > likelihood that the buyer will or not have an R&D department and the
> > supplier will or not have an R&D department. As I mentioned, I am
> > able
> > to produce an output in which I can observe the first level, but in
> > the second level instead of comparing buyers that have R&D with
> > buyers
> > that do not have it (and the same wit!
> >  h suppliers), my output shows all the 4 final alternatives in the
> > same model, taking one of them as the baseline.
> >
> > That is the command I am using to build the tree:
> >
> > nlogitgen r&d= final_outcome(buyer_n: 1, buyer_w: 2, supplier_n: 3,
> > supplier_w: 4)
> > nlogitgen buyer_or_supplier= r&d(buyer: buyer_n | buyer_w , 
> > supplier:
> > supplier_n | supplier_w)
> >
> > I could not figure out a way to compare only buyers with and without
> > R&D and suppliers with and without R&D in the second level.
> >
> > Any suggestions are more than welcome
> > Very best,
> > Solon
> >
> > *
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>
> --
> Sergio Alvarez
> Food and Resource Economics
> University of Florida
> *
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>
> *
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--
Sergio Alvarez
Food and Resource Economics
University of Florida
*
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