TITLE:
Bayesian Item Response Analysis of Method-of-Payment Habits in Banking Surveys
AUTHORS:
Saman Muthukumarana, Kyle Vincent, Jenna G. Tichon
KEYWORDS:
Bayesian Analysis, Item Response Theory, Markov Chain Monte Carlo, Predictive Simulations
JOURNAL NAME:
Journal of Mathematical Finance,
Vol.9 No.1,
December
28,
2018
ABSTRACT: Customers have a wide variety of choices in selecting a method of payment in
modern society due to advancements in technology. In this paper, we investigate
the method of payment habits of banking customers using item response
models. We consider three binary item response models used in the
literature within the Bayesian framework. These models capture the heterogeneity
and complexity of customer perception on methods of payment in
different capacities, with different features. For this reason, model assessment
methods need to be developed for better inferential purposes. We introduce
an assessment criterion based on predictive simulations and illustrate the approach
using graphical summary measures. The approach is further highlighted
using survey data based on consumer payment choices that was
conducted for the Federal Reserve Bank of Boston.