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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Paper provided by EconWPA in its series Econometrics with number
0312001.
Find related papers by JEL classification: C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
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