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A model for broad choice data

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  • Brownstone, David
  • Li, Phillip

Abstract

This paper analyzes a discrete choice model where the observed outcome is not the exact alternative chosen by a decision maker but rather the broad group of alternatives which contain the chosen alternative. The model is designed for situations where the choice behavior at a particular level is of interest but only broader level data are available. For example, consider analyzing a household's choice for a vehicle at the make-model-trim level but only choice data at the make-model level are observed. The proposed model is a generalization of the multinomial logit model and collapses to it when there is full observability of the exact choices. We show that the parameters in the model are at least locally identified, but for certain configurations of the data, they are only weakly identified. Methods to address weak identification are proposed when there are data available on the overall market shares of all alternatives, and both maximum likelihood and Bayesian estimation methods are explored.

Suggested Citation

  • Brownstone, David & Li, Phillip, 2018. "A model for broad choice data," Journal of choice modelling, Elsevier, vol. 27(C), pages 19-36.
    • Handle: RePEc:eee:eejocm:v:27:y:2018:i:c:p:19-36
    DOI: 10.1016/j.jocm.2017.09.001
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    References listed on IDEAS

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    1. Jean‐Pierre Dubé & Jeremy T. Fox & Che‐Lin Su, 2012. "Improving the Numerical Performance of Static and Dynamic Aggregate Discrete Choice Random Coefficients Demand Estimation," Econometrica, Econometric Society, vol. 80(5), pages 2231-2267, September.
    2. Rothenberg, Thomas J, 1971. "Identification in Parametric Models," Econometrica, Econometric Society, vol. 39(3), pages 577-591, May.
    3. Chib, Siddhartha & Ramamurthy, Srikanth, 2010. "Tailored randomized block MCMC methods with application to DSGE models," Journal of Econometrics, Elsevier, vol. 155(1), pages 19-38, March.
    4. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    5. Wong, Timothy & Brownstone, David & Bunch, David S., 2019. "Aggregation biases in discrete choice models," Journal of choice modelling, Elsevier, vol. 31(C), pages 210-221.
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    Cited by:

    1. Lloro, Alicia & Brownstone, David, 2018. "Vehicle choice and utilization: Improving estimation with partially observed choices and hybrid pairs," Journal of choice modelling, Elsevier, vol. 28(C), pages 137-152.

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