IDEAS home Printed from https://ideas.repec.org/a/eee/transb/v30y1996i1p19-30.html
   My bibliography  Save this article

A Monte Carlo study of tests for the independence of irrelevant alternatives property

Author

Listed:
  • Fry, Tim R. L.
  • Harris, Mark N.

Abstract

A plethora of tests for the Independence of Irrelevant Alternatives (IIA) property of Logit models of discrete choice behavior has been proposed in the literature. These tests are based upon asymptotic arguments and little is known about their size and power properties in finite samples. This paper uses a Monte Carlo simulation study to investigate the size and power properties of six tests for IIA in the multinomial Logit model. Our results show that the majority of tests based upon partitioning the choice set appear to have very poor size and power properties in small samples. Tests for IIA based upon the DOGIT model, similarly have poor size properties, but in some circumstances do have reasonable power properties.

Suggested Citation

  • Fry, Tim R. L. & Harris, Mark N., 1996. "A Monte Carlo study of tests for the independence of irrelevant alternatives property," Transportation Research Part B: Methodological, Elsevier, vol. 30(1), pages 19-30, February.
    • Handle: RePEc:eee:transb:v:30:y:1996:i:1:p:19-30
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/0191-2615(95)00019-4
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marc J. I. Gaudry, 1980. "Dogit and Logit Models of Travel Mode Choice in Montreal," Canadian Journal of Economics, Canadian Economics Association, vol. 13(2), pages 268-279, May.
    2. Hausman, Jerry & McFadden, Daniel, 1984. "Specification Tests for the Multinomial Logit Model," Econometrica, Econometric Society, vol. 52(5), pages 1219-1240, September.
    3. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. T.R.L. Fry & R.D. Brooks & Br. Comley & J. Zhang, 1993. "Economic Motivations for Limited Dependent and Qualitative Variable Models," The Economic Record, The Economic Society of Australia, vol. 69(2), pages 193-205, June.
    5. Tse, Y K, 1989. "A Proportional Random Utility Approach to Qualitative Response Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(1), pages 61-65, January.
    6. Small, Kenneth A & Hsiao, Cheng, 1985. "Multinomial Logit Specification Tests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 619-627, October.
    7. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, Decembrie.
    8. Gaundry, Marc J. I. & Dagenais, Marcel G., 1979. "The dogit model," Transportation Research Part B: Methodological, Elsevier, vol. 13(2), pages 105-111, June.
    9. Fry, T R L, et al, 1993. "Economic Motivations for Limited Dependent and Qualitative Variable Models," The Economic Record, The Economic Society of Australia, vol. 69(205), pages 193-205, June.
    10. Gaudry, Marc J. I. & Wills, Michael J., 1979. "Testing the dogit model with aggregate time-series and cross-sectional travel data," Transportation Research Part B: Methodological, Elsevier, vol. 13(2), pages 155-166, June.
    11. Swait, Joffre & Ben-Akiva, Moshe, 1987. "Empirical test of a constrained choice discrete model: Mode choice in São Paulo, Brazil," Transportation Research Part B: Methodological, Elsevier, vol. 21(2), pages 103-115, April.
    12. Tse, Y K, 1987. "A Diagnostic Test for the Multinomial Logit Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 283-286, April.
    13. Swait, Joffre & Ben-Akiva, Moshe, 1987. "Incorporating random constraints in discrete models of choice set generation," Transportation Research Part B: Methodological, Elsevier, vol. 21(2), pages 91-102, April.
    14. Bordley, Robert F., 1990. "The dogit model is applicable even without perfectly captive buyers," Transportation Research Part B: Methodological, Elsevier, vol. 24(4), pages 315-323, August.
    15. Horowitz, Joel, 1981. "Identification and diagnosis of specification errors in the multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 15(5), pages 345-360, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tim R. L. Fry & Mark N. Harris, 1998. "Testing for Independence of Irrelevant Alternatives," Sociological Methods & Research, , vol. 26(3), pages 401-423, February.
    2. Junsen Zhang & Saul D. Hoffman, 1993. "Discrete-Choice Logit Models," Sociological Methods & Research, , vol. 22(2), pages 193-213, November.
    3. Nchare, Karim, 2021. "Dogit model and rational inattention," Economics Letters, Elsevier, vol. 205(C).
    4. Wang, Guangchao & Chen, Anthony & Kitthamkesorn, Songyot & Ryu, Seungkyu & Qi, Hang & Song, Ziqi & Song, Jianguo, 2020. "A multi-modal network equilibrium model with captive mode choice and path size logit route choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 136(C), pages 293-317.
    5. Amoh-Gyimah, Richard & Aidoo, Eric Nimako, 2013. "Mode of transport to work by government employees in the Kumasi metropolis, Ghana," Journal of Transport Geography, Elsevier, vol. 31(C), pages 35-43.
    6. Fok, D. & Paap, R., 2019. "New Misspecification Tests for Multinomial Logit Models," Econometric Institute Research Papers EI2019-24, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    7. Cascetta, Ennio & Papola, Andrea, 2009. "Dominance among alternatives in random utility models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(2), pages 170-179, February.
    8. Etwire, Prince Maxwell, 2020. "The impact of climate change on farming system selection in Ghana," Agricultural Systems, Elsevier, vol. 179(C).
    9. Simon Cheng & J. Scott Long, 2007. "Testing for IIA in the Multinomial Logit Model," Sociological Methods & Research, , vol. 35(4), pages 583-600, May.
    10. Joffre Swait & Fred Feinberg, 2014. "Deciding how to decide: an agenda for multi-stage choice modelling research in marketing," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 26, pages 649-660, Edward Elgar Publishing.
    11. Arjun Seshadri & Johan Ugander, 2020. "Fundamental Limits of Testing the Independence of Irrelevant Alternatives in Discrete Choice," Papers 2001.07042, arXiv.org.
    12. T.R.L. Fry & R.D. Brooks & Br. Comley & J. Zhang, 1993. "Economic Motivations for Limited Dependent and Qualitative Variable Models," The Economic Record, The Economic Society of Australia, vol. 69(2), pages 193-205, June.
    13. Diana Mok, 2007. "Do Two-earner Households Base Their Choice of Residential Location on Both Incomes?," Urban Studies, Urban Studies Journal Limited, vol. 44(4), pages 723-750, April.
    14. Vijverberg, Wim P., 2011. "Testing for IIA with the Hausman-McFadden Test," IZA Discussion Papers 5826, Institute of Labor Economics (IZA).
    15. Mokhtarian, Patricia L., 2016. "Presenting the Independence of Irrelevant Alternatives property in a first course on logit modeling," Journal of choice modelling, Elsevier, vol. 21(C), pages 25-29.
    16. Swait, Joffre, 2001. "Choice set generation within the generalized extreme value family of discrete choice models," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 643-666, August.
    17. Roel Massink & Mark Zuidgeest & Jaap Rijnsburger & Olga L. Sarmiento & Martin van Maarseveen, 2011. "The Climate Value of Cycling," Natural Resources Forum, Blackwell Publishing, vol. 35(2), pages 100-111, May.
    18. Baltas, George & Saridakis, Charalampos, 2013. "An empirical investigation of the impact of behavioural and psychographic consumer characteristics on car preferences: An integrated model of car type choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 54(C), pages 92-110.
    19. Cappelli, Riccardo & Corsino, Marco & Laursen, Keld & Torrisi, Salvatore, 2023. "Technological competition and patent strategy: Protecting innovation, preempting rivals and defending the freedom to operate," Research Policy, Elsevier, vol. 52(6).
    20. Tim R.L. Fry & Mark N. Harris, 2002. "The DOGEV Model," Monash Econometrics and Business Statistics Working Papers 7/02, Monash University, Department of Econometrics and Business Statistics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transb:v:30:y:1996:i:1:p:19-30. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.