Estimation with the Nested Logit Model: Specifications and Software Particularities
AbstractThe paper discusses the nested logit model for choices between a set of mutually exclusive alternatives (e.g. brand choice, strategy decisions, modes of transportation, etc.). Due to the ability of the nested logit model to allow and account for similarities between pairs of alternatives, the model has become very popular for the empirical analysis of choice decisions. However the fact that there are two different specifications of the nested logit model (with different outcomes) has not received adequate attention. The utility maximization nested logit (UMNL) model and the non-normalized nested logit (NNNL) model have different properties, influencing the estimation results in a different manner. This paper introduces distinct specifications of the nested logit model and indicates particularities arising from model estimation. The effects of using various software packages on the estimation results of a nested logit model are shown using simulated data sets for an artificial decision situation.
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 InfoPaper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2007-046.
Length: 34 pages
Date of creation: Aug 2007
Date of revision:
nested logit model; utility maximization nested logit; nonnormalized nested logit; simulation study;
Other versions of this item:
- Nadja Silberhorn & Yasemin Boztug & Lutz Hildebrandt, 2006. "Estimation with the Nested Logit Model: Specifications and Software Particularities," SFB 649 Discussion Papers SFB649DP2006-017, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software
- M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-08 (All new papers)
- NEP-DCM-2007-08-08 (Discrete Choice Models)
- NEP-ECM-2007-08-08 (Econometrics)
- NEP-UPT-2007-08-08 (Utility Models & Prospect Theory)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Nga Ndjobo, Patrick Marie & Abessolo, Yves André, 2013. "The Impact of Education on the Behaviour of Labor Supply in Cameroon: an Analysis using the Nested Multinomial Logit Model," MPRA Paper 51158, University Library of Munich, Germany.
- Philip H. Brown & Caroline Theoharides, 2009. "Health‐seeking behavior and hospital choice in China's New Cooperative Medical System," Health Economics, John Wiley & Sons, Ltd., vol. 18(S2), pages S47-S64, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RDC-Team).
If references are entirely missing, you can add them using this form.