Competing methods for representing random taste heterogeneity in discrete choice models
AbstractThis paper reports the findings of a systematic study using Monte Carlo experiments and a real dataset aimed at comparing the performance of various ways of specifying random taste heterogeneity in a discrete choice model. Specifically, the analysis compares the performance of two recent advanced approaches against a background of four commonly used continuous distribution functions. The first of these two approaches improves on the flexibility of a base distribution by adding in a series approximation using Legendre polynomials. The second approach uses a discrete mixture of multiple continuous distributions. Both approaches allows the researcher to increase the number of parameters as desired. The paper provides a range of evidence on the ability of the various approaches to recover various distributions from data. The two advanced approaches are comparable in terms of the likelihoods achieved, but each has its own advantages and disadvantages.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 10038.
Date of creation: 2008
Date of revision:
random taste heterogeneity; mixed logit; method of sieves; mixtures of distributions;
Find related papers by JEL classification:
- R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-21 (All new papers)
- NEP-DCM-2008-08-21 (Discrete Choice Models)
- NEP-ECM-2008-08-21 (Econometrics)
- NEP-ORE-2008-08-21 (Operations Research)
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