Graphical Illustration of Interaction Effects in Binary Choice Models: A Note

Jason R.V. Franken; Joost M.E. Pennings; Philip Garcia

doi:10.1111/1477-9552.12257

Graphical Illustration of Interaction Effects in Binary Choice Models: A Note

Jason R.V. Franken^*, Joost M.E. Pennings, Philip Garcia

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

4 Citations (Scopus)

Abstract

Graphing procedures for evaluating power or interaction terms in binary logit and probit models are illustrated in an application to hog producers' decisions based on transaction cost economics' hypothesised positive effect of the interaction of uncertainty and asset specificity on contract use. Results support the hypothesis, particularly for producers that are otherwise on the cusp (near the 50/50 probability) of choosing either contract or spot transactions based on their responses for other variables. Such insights may not be drawn without use of the demonstrated graphing procedures.

Original language	English
Pages (from-to)	852-858
Journal	Journal of Agricultural Economics
Volume	69
Issue number	3
Early online date	15 Dec 2017
DOIs	https://doi.org/10.1111/1477-9552.12257
Publication status	Published - Sept 2018

Keywords

Asset specificity
Binary choice models
Contracts
Transaction costs economics
Uncertainty

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10.1111/1477-9552.12257

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title = "Graphical Illustration of Interaction Effects in Binary Choice Models: A Note",

abstract = "Graphing procedures for evaluating power or interaction terms in binary logit and probit models are illustrated in an application to hog producers' decisions based on transaction cost economics' hypothesised positive effect of the interaction of uncertainty and asset specificity on contract use. Results support the hypothesis, particularly for producers that are otherwise on the cusp (near the 50/50 probability) of choosing either contract or spot transactions based on their responses for other variables. Such insights may not be drawn without use of the demonstrated graphing procedures.",

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author = "Franken, {Jason R.V.} and Pennings, {Joost M.E.} and Philip Garcia",

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AB - Graphing procedures for evaluating power or interaction terms in binary logit and probit models are illustrated in an application to hog producers' decisions based on transaction cost economics' hypothesised positive effect of the interaction of uncertainty and asset specificity on contract use. Results support the hypothesis, particularly for producers that are otherwise on the cusp (near the 50/50 probability) of choosing either contract or spot transactions based on their responses for other variables. Such insights may not be drawn without use of the demonstrated graphing procedures.

KW - Asset specificity

KW - Binary choice models

KW - Contracts

KW - Transaction costs economics

KW - Uncertainty

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DO - 10.1111/1477-9552.12257

M3 - Article

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JO - Journal of Agricultural Economics

JF - Journal of Agricultural Economics

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ER -

Graphical Illustration of Interaction Effects in Binary Choice Models: A Note

Abstract

Keywords

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