Incorporating Thresholds of Indifference in Probabilistic Choice Models
AbstractProbabilistic choice models are often based on utility concepts which call for assessments by decision makers of available alternatives. These models assume that distinct utilities can be derived from the decision maker's expressed preferences. Such an assumption is generally valid if the decision maker can recognize arbitrarily small utility differences. If the decision maker is indifferent between the alternatives the corresponding utilities are expected to be similar. In this paper, the concept of minimum perceivable difference is introduced into the conventional binary logit model. It is postulated that two alternatives are perceived as different only if the absolute difference in their utilities exceeds a positive constant. For estimating the parameters of the new model a maximum likelihood technique is employed, and an empirical test of the model is conducted using data on travelers' choice of mode for accessing commuter rail service from Lindenwold (New Jersey) to downtown Philadelphia. The model predicts individuals' choices in a holdout sample significantly better than the conventional logit model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 23 (1977)
Issue (Month): 11 (July)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Wayne DeSarbo & Kamel Jedidi & Joel Steckel, 1991. "A stochastic multidimensional scaling procedure for the empirical determination of convex indifference curves for preference/choice analysis," Psychometrika, Springer, vol. 56(2), pages 279-307, June.
- Cantillo, Víctor & Amaya, Johanna & Ortúzar, J. de D., 2010. "Thresholds and indifference in stated choice surveys," Transportation Research Part B: Methodological, Elsevier, vol. 44(6), pages 753-763, July.
- Andy Obermeyer & Bernhard Wieland & Christos Evangelinos, 2014. "Die ökonomische Bewertung kleiner Reisezeiteinsparungen," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 234(1), pages 44-69, January.
- Cantillo, Víctor & Heydecker, Benjamin & de Dios Ortúzar, Juan, 2006. "A discrete choice model incorporating thresholds for perception in attribute values," Transportation Research Part B: Methodological, Elsevier, vol. 40(9), pages 807-825, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.