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Orthogonal Moments in Likelihood Models

Stéphane Bonhomme, Koen Jochmans, Martin Weidner

arXiv 25 Sep 2026 · Econometrics

arXiv:2609.31561 · PDF · Extracted main text

Abstract

Many models, such as fixed-effect models for panel or network data, are hard to estimate because they feature nuisance parameters that are both numerous and estimated imprecisely. This, in general, causes an incidental-parameter problem in the estimator of the parameters of interest. The problem can be alleviated by working with an estimating equation whose expectation is insensitive to the value of the nuisance parameters. We discuss and contrast three notions of insensitivity, also called orthogonality, in the context of likelihood models: Neyman orthogonality, Neyman orthogonality to order q, and full orthogonality. Orthogonal moments are obtained by projecting the estimating equation on nested subspaces, which are spanned by, respectively, the scores of the nuisance parameters, the first q derivatives of the likelihood ratio with respect to the nuisance parameters, and all likelihood ratios of the model. We give explicit constructions in binary-choice, count-data, and nonlinear regression models.

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Neyman (1959) Optimal asymptotic tests of composite hypotheses1.00094100%
2Bonhomme, Jochmans, and Weidner (2024) A neyman-orthogonalization approach to the incidental parameter problem self1.00053100%
3Bonhomme and Dano (2024) Functional Differencing in Networks0.84333100%
4Graham (2017) An econometric model of network formation with degree heterogeneity0.84333100%
5Bonhomme (2012) Functional differencing self0.81142100%
6Abowd, Kramarz, and Margolis (1999) High wage workers and high wage firms0.73732100%
7Crippa (2025) Identification, Estimation, and Inference in Two-Sided Interaction Models0.73732100%
8Ahmadpoor and Jones (2019) Decoding team and individual impact in science and invention0.64422100%
9Bhattacharyya (1946) On some analogues of the amount of information and their use in statistical estimation0.64422100%
10Chernozhukov, Chetverikov, Demirer, Duflo, Hansen, Newey, and Robins (2018) Double/debiased machine learning for treatment and structural parameters0.64422100%

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