2019 TutORial: Structural Economic Models

Given by Yong Tan at the 2019 INFORMS Annual Meeting in Seattle, WA.

In this tutorial, we discuss the concept of structural econometric models and their applications in business and management research. Structural models are constructed by grounding on economic and related theories and attempt to accurately reflect underlying data generating processes. One unique advantage of structural models is their capability to simulate user or firm strategic behaviors under new policies and measure the effectiveness of these proposed policies, and hence generate convincing managerial suggestions. We present three representative classes of structural models: demand estimation using aggregate data, dynamic choice models, and two-sided matching models, to demonstrate model specification, assumptions, and estimation procedures.