We Know What You Choose! External Validity of Discrete Choice Models
AbstractFor over the last thirty years the multinomial logit model has been the standard in choice modeling. Development in econometrics and computational algorithms has led to the increasing tendency to opt for more flexible models able to depict more realistically choice behavior. This study compares three discrete choice models, the standard multinomial logit, the error components logit, and the random parameters logit. Data were obtained from two choice experiments conducted to investigate consumers’ preferences for fresh pears receiving several postharvest treatments. Model comparisons consisted of in-sample and holdout sample evaluations. Results show that product characteristics hence, datasets, influence model performance. We also found that the multinomial logit model outperformed in at least one of three evaluations in both datasets. Overall, findings signal the need for further studies controlling for context and dataset to have more conclusive cues for discrete choice models capabilities.
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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2009-07.
Length: 23 pages
Date of creation: Apr 2010
Date of revision:
discrete choice models; validation; holdout sample;
Find related papers by JEL classification:
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
- NEP-DCM-2010-05-02 (Discrete Choice Models)
- NEP-ECM-2010-05-02 (Econometrics)
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