1 What, why
Goals： Gain an in-depth understanding of some of the most common structural estimation methods in modern empirical economics；Develop the technical ability to apply these structural estimation methods to your own research；Apply these methods to discrete choice models motivated by the random utility model.
Nonstructural example
We observe the winning bid and the number of bidders from many auctions, and we want to understand the relationship between the number of bidders and the winning bid
Structural example
Therefore, the structure model can be used to
- Estimate unobserved parameters which nonstructural model cannot estimated.
- Counterfactual estimations.
- Comparing economic theries.
2 How
- Economic theory
( Model setting; exogenous variables; objective function and decision; equlibrium
- Transform the economic model to econometric model
( Unobservables that account for the data not perfectly fitting the economic model)
- Estimation
(Function forms; distribution assumptions; estimation method; specification tests)
3 Example
Miller, N.H. and Weinberg, M.C., 2017. Understanding the price effects of the MillerCoors joint venture. Econometrica, 85(6), pp.1763-1791.
Background
Data
