Transcription of Modeling the Choice of Residential Location
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Modeling the Choice of Residential Location
72. Modeling the Choice of Residential Location Daniel McFadden, Department of Economics, Massachusetts Institute of Technology, Cambridge The problem of translating the theory of economic Choice behavior into section on limiting the number of alternatives establishes concrete models suitable for analyzing housing Location is discussed. The that, if Choice among a set of alternatives is described analysis is based on the premise that the classical, economically rational by a multinomial logit model, then the model can be consumer will choose a Residential Location by weighing the attributes of each available alternative and by selecting the alternative that maximizes estimated by sampling from the full set of alternatives, utility.
tives by Luce, is that the relative odds for any two al ternatives are independent of the attributes, or even the availability, of any other alternative. This prop erty is extremely useful in simplifying econometric esti mation and forecasting (7) but can be shown to be im-. plausible for choice probi.ems where it is unreasonable
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