Raphaelle,
The model you are estimating assumes that the differences among markets
(on a log scale) are multivariate normal with mean 0 and variance sigma^2
= 0.07 - and zero correlation among markets. Another way of interpreting
the magnitude of that value is to compare the standard deviation of the
market random effect with the size of the intercept - so you have a CV
there of 0.27 / |-1.37| = 20% not an insignificant amount of variation
among markets. This model allows the mean responses to be similar WITHIN
markets - accounting for the correlations between traders at the same
market.
hth,
Drew Tyre
School of Natural Resources
University of Nebraska-Lincoln
416 Hardin Hall, East Campus
3310 Holdrege Street
Lincoln, NE 68583-0974
phone: +1 402 472 4054
fax: +1 402 472 2946
email: atyre2 at unl.edu
http://snr.unl.edu/tyre