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Public Lectures on Structural Econometrics - CEMMAP masterclass - Shared screen with speaker view
Emilio Borghesan
46:14
Quick question: the "weights" are simply the probability of reaching state x_tau in period t+tau when you are in state x and make decision j in period t?
Elena Pastorino
52:42
@Emilio: not quite. these weights in principle can be negative (see slide 23 and their definition based on kappa_t and kappa_tau)
Elena Pastorino
01:00:34
@Emilio: these weights "subsume" possibly positive or negative differences between conditional continuation values and the ex ante value which no longer "appear" in the expression for a conditional value. this way you no longer need to compute any value, that is, only static utility and weighted transitions appear in all expression so no maximization is necessary
Elena Pastorino
01:26:34
Arcidiacono and Miller (ECTA, 2011) have a very nice leading example based on Rust (ECTA, 1987) in which this logic is transparently spelled out. Highly recommended!
Giuseppe Forte
01:43:06
so in short while normalisation in static discrete choice is wlog, it is not in dynamic discrete choice right?
Elena Pastorino
01:49:49
@GIuseppe: yes, that's right. In fact normalizations in the dynamic case, as normally invoked, are not quite normalizations in the usual sense (ie immaterial level/scale anchoring) since the normalization factors usually depend on endogenous model objects.
Giuseppe Forte
01:50:18
yep thanks,
Vladimir Yankov
02:24:43
Thank you
Julio Galvez
02:24:47
Thank you!
Bhavya Srivastava
02:24:51
Thank you
EDGAR COOKE
02:24:53
Thank you
Vasilis Pappas
02:24:54
thank you!!