Adaptive binary choice model and its practical use opportunities

Abstract

Purpose: the authors develop the adaptive binary choice models on the basis of a new approach to the implementation of adaptive principles. Discussion: the adaptation principles are universality. The spheres of adaptation principles use are live nature, science, technology, theory and management practice. The adaptation principles occupy the special place in the modeling of economic processes. The exponential smoothing is the basis of practical implementation of adaptation principles mechanism and the adaptive expectations hypothesis. The attenuation of earlier trends and patterns happens as a result of applying this procedure. This provides the natural dominance of last observations regularities. The authors consider the question of uniqueness of exponential smoothing procedure in the implementation the smooth replacement of old with new trends. The authors examine the strengthening of emerging again trends. Results: the writers proposed the constructing method of adaptive mechanism. Power smoothing is this mechanism. The authors suggest to use the power smoothing in comparison with exponential smoothing for build nonlinear regression models. The writers estimate coefficients of these models with the help of maximum likelihood method. The exponential smoothing takes into account the specifics of likelihood method. The authors outlined the all details of this approach application for build the adaptive binary choice mode.