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# Re: Again the requrest: SIMULATION TO INTERPRET AND PRESENT LOGIT RESULTS without formatting - hopefully looks better

 From Scott Merryman <[email protected]> To [email protected] Subject Re: Again the requrest: SIMULATION TO INTERPRET AND PRESENT LOGIT RESULTS without formatting - hopefully looks better Date Fri, 2 Mar 2012 15:20:33 -0600

```On Fri, Mar 2, 2012 at 11:02 AM, Alexander M. Jais
<[email protected]> wrote:
<snip>
* How do I code the Interaction Variable and Independent Variable,
which are NOT binary – the explanation in Zellner shows only the
binary interaction term (see lines 3, 10, … in Do file below; based
on Zellner 2009, also attached, see pages 21-23) ?

* Why is in line 8 all independent variables set to zero?
<snip>

1.  How do you want to code the interaction of two ordinal variables?
In the example below using two continuous variables, mpg is allowed
vary over a range of values while gear_ratio is set at the minimum or
maximum value.

2.  From page 10 of the paper:  "The ambivalent firm, as defined by
Hoetker (2007b), is modeled by setting the values of the independent
variables other than asset specificity and demand uncertainty to zero,
and serves as a useful illustration because the predicted
probabilities for this hypothetical firm vary substantially..."

Example:

sysuse auto, clear
gen  mpggear= mpg*gear

estsimp logit fore mpg gear price mpggear
foreach var in X Y0 Y1 Y0lb Y1lb Y0ub Y1ub dY dYlb dYub {
gen `var' = .
}
setx price mean
qui {
forvalues obs = 20(1)40 {
replace X = `obs' in `obs'
setx mpg  `obs'+1
foreach as_lev in 0 1 {
if `as_lev' == 0 {
qui sum gear
local gear_lev = r(min)
}
if `as_lev' == 1 {
qui sum gear
local gear_lev = r(max)
}
setx gear `gear_lev' mpggear `gear_lev'*`obs'
simqi, genpr(Y`as_lev'_tmp) prval(1)
sum Y`as_lev'_tmp, meanonly
replace Y`as_lev' = r(mean) in `obs'
_pctile Y`as_lev'_tmp, p(2.5, 97.5)
replace Y`as_lev'lb = r(r1) in `obs'
replace Y`as_lev'ub = r(r2) in `obs'
}
drop *_tmp
}
}
twoway rbar Y0ub Y0lb X, mw msize(1) lcolor(gs12) fcolor(gs16)  ///
|| line Y0 X, color(gs12) ///
|| rspike Y1ub Y1lb X, color(gs0) lp(dot)  ///
|| line Y1 X, color(gs0) ///
|| , yscale (r(0 1)) ylabel(0(.2)1) ///
legend(order(2 "Minimum Gear Ratio" 4 "Maximum Gear Ratio") size(*.7)) ///
xtitle("MPG") ytitle("Probility of Foreign Origin") graphregion(fcolor(gs16))

Scott

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