The perceived unreliability of rank-ordered data: an econometric origin and implications

Hong il Yoo ()
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Hong il Yoo: University of New South Wales

No 2012-46, Discussion Papers from School of Economics, The University of New South Wales

Abstract: The problem of unstable coecients in the rank-ordered logit model has been traditionally interpreted as a sign that survey respondents fail to provide reliable ranking responses. This paper shows that the problem may embody the inherent sensitivity of the model to stochastic misspecification instead. Even a minor departure from the postulated random utility function can induce the problem, for instance when rank-ordered logit is estimated whereas the true additive disturbance is iid normal over alternatives. Related implications for substantive analyses and further modelling are explored. In general, a well-speci ed random coecient rank-ordered logit model can mitigate, though not eliminate, the problem and produce analytically useful results. The model can also be generalised to be more suitable for forecasting purposes, by accommodating that stochastic misspecification matters less for individuals with more deterministic preferences. An empirical analysis using an Australian nursing job preferences survey shows that the estimates behave in accordance with these implications.

Keywords: rank-ordered logit; mixed logit; latent class; stated ranking (search for similar items in EconPapers)
JEL-codes: C25 C52 C81 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2012-11
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (1)

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