Explaining Experimental data with EUT or PT: Using Structural Equation modeling or Fixed Mixture model?
Dear All,
I will try to be as clear as possible.
Some background:
I am doing experiments in economics and I have a huge dataset of experiments mirroring real life tax declaration. Participants in the lab face some audit probability, fine size etc. and decide how much income they want to declare.
There are multiple structural models that we could estimate on this dataset: the Expected Utility model (people are rational) and the Prospect Theory model (people overweight low probabilities of being audited). I would like to do a horse race and check which model better explain my data.
My request:
I know that it is something that has been done for example by Bruhin et al. (2010) and Harrisson & Rutström (2009) on using data from risk experiments.
I have heard that there might be ways using structural equation modeling or fixed mixture models. However, I do not know anything about how to implement that, and I do not know where/how to start.
Would someone have some clues about what to do?
Note that I am not extremely knowledgeable in stata, please be pedagogue
Thank you very much in advance!
Best,
Antoine
Biblio:
Bruhin, A., Fehr‐Duda, H., & Epper, T. (2010). Risk and rationality: Uncovering heterogeneity in probability distortion. Econometrica, 78(4), 1375-1412.
Harrison, G. W., & Rutström, E. E. (2009). Expected utility theory and prospect theory: One wedding and a decent funeral. Experimental economics, 12(2), 133.
I will try to be as clear as possible.
Some background:
I am doing experiments in economics and I have a huge dataset of experiments mirroring real life tax declaration. Participants in the lab face some audit probability, fine size etc. and decide how much income they want to declare.
There are multiple structural models that we could estimate on this dataset: the Expected Utility model (people are rational) and the Prospect Theory model (people overweight low probabilities of being audited). I would like to do a horse race and check which model better explain my data.
My request:
I know that it is something that has been done for example by Bruhin et al. (2010) and Harrisson & Rutström (2009) on using data from risk experiments.
I have heard that there might be ways using structural equation modeling or fixed mixture models. However, I do not know anything about how to implement that, and I do not know where/how to start.
Would someone have some clues about what to do?
Note that I am not extremely knowledgeable in stata, please be pedagogue
Thank you very much in advance!
Best,
Antoine
Biblio:
Bruhin, A., Fehr‐Duda, H., & Epper, T. (2010). Risk and rationality: Uncovering heterogeneity in probability distortion. Econometrica, 78(4), 1375-1412.
Harrison, G. W., & Rutström, E. E. (2009). Expected utility theory and prospect theory: One wedding and a decent funeral. Experimental economics, 12(2), 133.
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