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Tests for the consistency of three-level nested logit models with utility maximization

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  • Gil-Molto, Maria Jose
  • Hole, Arne Risa

Abstract

This paper provides necessary conditions for testing the local consistency of three-level nested logit models with random utility maximization. We find that for a model with two sub-nests per nest the conditions can lead to a substantial increase in the range of acceptable dissimilarity parameters, irrespective of the number of alternatives per sub-nest.
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  • Gil-Molto, Maria Jose & Hole, Arne Risa, 2004. "Tests for the consistency of three-level nested logit models with utility maximization," Economics Letters, Elsevier, vol. 85(1), pages 133-137, October.
  • Handle: RePEc:eee:ecolet:v:85:y:2004:i:1:p:133-137
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    7. Lahiri, Kajal & Gao, Jian, 2002. "Bayesian analysis of nested logit model by Markov chain Monte Carlo," Journal of Econometrics, Elsevier, vol. 111(1), pages 103-133, November.
    8. Stuart A. Gabriel & Gary Painter, 2003. "Intra-Metropolitan Mobility, Residential Location and Homeownership Choice Among Minority and White Households: Estimates of a Nested Multinomial Logit Model," Working Paper 8618, USC Lusk Center for Real Estate.
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    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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