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

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
Number of pages	7
Journal	Journal of Agricultural Economics
Volume	69
Issue number	3
Early online date	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
TRANSACTION COST ECONOMICS
ARRANGEMENTS
CONTRACTS
ISSUES
LOGIT

Access to Document

10.1111/1477-9552.12257

Cite this

@article{a003681bd9354c4eb9b7905faf1bd041,

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.",

keywords = "Asset specificity, binary choice models, contracts, transaction costs economics, uncertainty, TRANSACTION COST ECONOMICS, ARRANGEMENTS, CONTRACTS, ISSUES, LOGIT",

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

note = "data source: with co-author",

year = "2018",

month = sep,

doi = "10.1111/1477-9552.12257",

language = "English",

volume = "69",

pages = "852--858",

journal = "Journal of Agricultural Economics",

issn = "0021-857X",

publisher = "Wiley-Blackwell Publishing, Inc.",

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AU - Franken, Jason R.V.

AU - Pennings, Joost M.E.

AU - Garcia, Philip

N1 - data source: with co-author

PY - 2018/9

Y1 - 2018/9

N2 - 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.

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

KW - TRANSACTION COST ECONOMICS

KW - ARRANGEMENTS

KW - CONTRACTS

KW - ISSUES

KW - LOGIT

U2 - 10.1111/1477-9552.12257

DO - 10.1111/1477-9552.12257

M3 - Article

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VL - 69

SP - 852

EP - 858

JO - Journal of Agricultural Economics

JF - Journal of Agricultural Economics

IS - 3

ER -