Lecture 5 Multiple Choice Models Part I –MNL, Nested Logit

RS Lecture 171 Lecture 5 Multiple Choice ModelsPart I MNL, Nested LogitDCM: Different Models Popular Models :1. Probit model 2. Binary Logit Model3. Multinomial Logit Model4. Nested Logit model5. Ordered Logit model Relevant literature:- Train (2003): Discrete Choice Methods with Simulation- Franses and Paap (2001): Quantitative Models in Market Research- Hensher, Rose and Greene (2005): Applied Choice AnalysisRS Lecture 17 Multinomial Logit (MNL) model In many of the situations, discrete responses are more complex than the binary case:- Single Choice out of more than two alternatives: Electoral choices and interest in explaining the vote for a particular party. - Multiple choices: Travel to work in rush hour, and travel to work out of rush hour, as well as the Choice of bus or car.

realistic property. Many experiments reject it.) nj nj k nk n n P P x P y j x = − β ∂ ∂ = (1 ) ( | ) nk nj k nj nj k nj nk nk nj x P P P P x x P = − β = − β ∂ ∂ (1 ) (1 ) log log MNL Model –Interpretation & Effects •Interpretation of parameters –Probability-ratio –Does not depend on the other alternatives! A change in ...

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