Discrete Choice Models with Random Parameters in R: The Rchoice Package

Abstract

Rchoice is a package in R for estimating models with individual heterogeneity for both cross-sectional and panel (longitudinal) data. In particular, the package allows binary, ordinal and count response, as well as continuous and discrete covariates. Individual heterogeneity is modeled by allowing the parameter associated with each observed variable (e.g., its coefficient) to vary randomly across individuals according to some pre-specified distribution. Simulated maximum likelihood method is implemented for the estimation of the moments of the distributions. In addition, functions for plotting the conditional individual-specific coefficients and their confidence interval are provided. This article is a general description of Rchoice and all functionalities are illustrated using real databases.

Keywords

• discrete choice models
• random parameters
• simulated maximum likelihood estimation
• R
• individual-specific estimates