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A specification test for discrete choice models

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  • Chicu, Mark
  • Masten, Matthew A.

Abstract

In standard discrete choice models, adding options cannot increase the choice probability of an existing alternative. We use this observation to construct a simple nonparametric specification test by exploiting variation in the choice sets individuals face. We use a multiple testing procedure to determine the particular kind of choice sets that produce violations. We apply these tests to the 1896 US House of Representatives election and reject commonly used discrete choice voting models.

Suggested Citation

  • Chicu, Mark & Masten, Matthew A., 2013. "A specification test for discrete choice models," Economics Letters, Elsevier, vol. 121(2), pages 336-339.
    • Handle: RePEc:eee:ecolet:v:121:y:2013:i:2:p:336-339
    DOI: 10.1016/j.econlet.2013.08.024
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    References listed on IDEAS

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    1. Joseph P. Romano & Michael Wolf, 2005. "Stepwise Multiple Testing as Formalized Data Snooping," Econometrica, Econometric Society, vol. 73(4), pages 1237-1282, July.
    2. Patrick Bayer & Christopher Timmins, 2007. "Estimating Equilibrium Models Of Sorting Across Locations," Economic Journal, Royal Economic Society, vol. 117(518), pages 353-374, March.
    3. William A. Brock & Steven N. Durlauf, 2001. "Discrete Choice with Social Interactions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 235-260.
    4. Ji Li & Lung‐fei Lee, 2009. "Binary choice under social interactions: an empirical study with and without subjective data on expectations," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(2), pages 257-281, March.
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    More about this item

    Keywords

    Discrete choice models; Specification tests; Multiple hypothesis testing; Voting behavior; Social interactions;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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