Greetings. My situation is as follows: I collected data at time 1 on 150
joint ventures. At time 2, I observed a four-category outcome -
1) Goes bankrupt, n=26
2) remains a joint venture, n=61
3) becomes a foreign owned wholly-owned subsidiary, n=32
4) becomes a locally owned wholly-owned subsidiary, n=31
I conceptualize this as a three-level nested logit model.
1. Do they go bankrupt (n=26), or survive (n=124)?
2. Of those that survive, do they remain a joint venture (n=61), or do they
become a wholly owned subsidiary (n=63)
3. Of those that become a wholly-owned subsidiary, are they foreign owned
(n=32), or locally owned (n=31)
When I run this in LIMDEP using three continuous independent variables, I
get the following:
Error: 803: Hessian is not positive definite at start values.
B0 is too far from solution for Newton method.
Switching to BFGS as a better solution method.
NOTE: Convergence in initial iterations is rarely
at a true function optimum. This may not be a
solution (especially if initial iterations stopped).
Exit from iterative procedure. 1 iterations completed.
Check convergence values shown below.
Gradient value: Tolerance= .1000D-05, current value= .0000D+00
Function chg. : Tolerance= .0000D+00, current value= .0000D+00
Parameters chg: Tolerance= .0000D+00, current value= .0000D+00
Smallest abs. param. change from start value = .0000D+00
At least one parameter did not leave start value.
Normal exit from iterations. Exit status=0.
My questions:
1. Am I expecting too much from my data? Is nested logit not appropriate?
2. Would STATA have better functionality for nested logit?
3. Could I simply use multinomial logit? What are the disadvantages?
Any insight would be much appreciated. Thanks!!
**********************************
H. Kevin Steensma
Associate Professor of Management and Org.
Gerhardt Faculty Fellow
University of Washington
Mackenzie Hall, Box 353200
Seattle, WA 98195
206-543-4897
Fax: 206-685-9392
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