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 journalArticleAcademicpeer-review

3 Citations (Scopus)


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 languageEnglish
Pages (from-to)852-858
JournalJournal of Agricultural Economics
Issue number3
Early online date15 Dec 2017
Publication statusPublished - Sept 2018


  • Asset specificity
  • Binary choice models
  • Contracts
  • Transaction costs economics
  • Uncertainty


Dive into the research topics of 'Graphical Illustration of Interaction Effects in Binary Choice Models: A Note'. Together they form a unique fingerprint.

Cite this