6,123 research outputs found
Structural Equation Modeling and simultaneous clustering through the Partial Least Squares algorithm
The identification of different homogeneous groups of observations and their
appropriate analysis in PLS-SEM has become a critical issue in many appli-
cation fields. Usually, both SEM and PLS-SEM assume the homogeneity of all
units on which the model is estimated, and approaches of segmentation present
in literature, consist in estimating separate models for each segments of
statistical units, which have been obtained either by assigning the units to
segments a priori defined. However, these approaches are not fully accept- able
because no causal structure among the variables is postulated. In other words,
a modeling approach should be used, where the obtained clusters are homogeneous
with respect to the structural causal relationships. In this paper, a new
methodology for simultaneous non-hierarchical clus- tering and PLS-SEM is
proposed. This methodology is motivated by the fact that the sequential
approach of applying first SEM or PLS-SEM and second the clustering algorithm
such as K-means on the latent scores of the SEM/PLS-SEM may fail to find the
correct clustering structure existing in the data. A simulation study and an
application on real data are included to evaluate the performance of the
proposed methodology
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Investment Risk Appraisal
Standard financial techniques neglect extreme situations and regards large market shifts as too unlikely to matter. This
approach may account for what occurs most of the time in the market, but the picture it presents does not reflect the reality, as the
major events happen in the rest of the time and investors are ‘surprised’ by ‘unexpected’ market movements. An alternative fuzzy
approach permits fluctuations well beyond the probability type of uncertainty and allows one to make fewer assumptions about the
data distribution and market behaviour. Fuzzifying the present value criteria, we suggest a measure of the risk associated with each
investment opportunity and estimate the project’s robustness towards market uncertainty. The procedure is applied to thirty-five UK
companies and a neural network solution to the fuzzy criterion is provided to facilitate the decision-making process. Finally, we
discuss the grounds for classical asset pricing model revision and argue that the demand for relaxed assumptions appeals for another
approach to modelling the market environment
A panel model for predicting the diversity of internal temperatures from English dwellings
Using panel methods, a model for predicting daily mean internal temperature demand across a heterogeneous domestic building stock is developed. The model offers an important link that connects building stock models to human behaviour. It represents the first time a panel model has been used to estimate the dynamics of internal temperature demand from the natural daily fluctuations of external temperature combined with important behavioural, socio-demographic and building efficiency variables. The model is able to predict internal temperatures across a heterogeneous building stock to within ~0.71°C at 95% confidence and explain 45% of the variance of internal temperature between dwellings. The model confirms hypothesis from sociology and psychology that habitual behaviours are important drivers of home energy consumption. In addition, the model offers the possibility to quantify take-back (direct rebound effect) owing to increased internal temperatures from the installation of energy efficiency measures. The presence of thermostats or thermostatic radiator valves (TRV) are shown to reduce average internal temperatures, however, the use of an automatic timer is statistically insignificant. The number of occupants, household income and occupant age are all important factors that explain a proportion of internal temperature demand. Households with children or retired occupants are shown to have higher average internal temperatures than households who do not. As expected, building typology, building age, roof insulation thickness, wall U-value and the proportion of double glazing all have positive and statistically significant effects on daily mean internal temperature. In summary, the model can be used as a tool to predict internal temperatures or for making statistical inferences. However, its primary contribution offers the ability to calibrate existing building stock models to account for behaviour and socio-demographic effects making it possible to back-out more accurate predictions of domestic energy demand
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