Impacts of Multiple Period Lags in Dynamic Logit Models

This paper will provide an introduction to a new field of research, viz the sensitivity of the solution trajectory of a dynamic logit model (belonging to the class of discrete choice models) in the light of a multi-period lag structure. It is well known from recent advances in the area of chaos and turbulence theory that the stability of a dynamic system is critically dependent on various factors, such as threshold values of parameters, initial conditions and also the lag structure. This paper aims to identify the consequences of different lag structures in dynamic logit models (including also dynamic spatial interaction models). Various simulation experiments will be used to show that the onset of instability of the solution trajectory tends to decrease as the number of time lags increases (depending also on the growt.h rate of the system) . Acknowledgement The second author would like to thank Andrea Gerali of the University of Bergamo for computer assistance. Also the CNR-grant n.88.03086.10 is greatfully acknowledged.