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A rank-ordered logit model with unobserved heterogeneity in ranking capabilities


  • van Dijk, A.
  • Fok, D.
  • Paap, R.


In this paper we consider the situation where one wants to study the preferences of individuals over a discrete choice set through a survey. In the classical setup respondents are asked to select their most preferred option out of a (selected) set of alternatives. It is well known that, in theory, more information can be obtained if respondents are asked to rank the set of alternatives instead. In statistical terms, the preferences can then be estimated more efficiently. However, when individuals are unable to perform (part of) this ranking task, using the complete ranking may lead to a substantial bias in parameter estimates. In practice, one usually opts to only use a part of the reported ranking. In this paper we introduce a latent-class rank-ordered logit model in which we use latent segments to endogenously identify the ranking capabilities of individuals. Each segment corresponds to a different assumption on the ranking capability. Using simulations and an empirical application, we show that using this model for parameter estimation results in a clear efficiency gain over a multinomial logit model in case some individuals are able to rank. At the same time it does not suffer from biases due to ranking inabilities of some of the respondents.

Suggested Citation

  • van Dijk, A. & Fok, D. & Paap, R., 2007. "A rank-ordered logit model with unobserved heterogeneity in ranking capabilities," Econometric Institute Research Papers EI 2007-07, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  • Handle: RePEc:ems:eureir:8533

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    References listed on IDEAS

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    13. Touza, Julia & Pérez-Alonso, Alicia & Chas-Amil, María L. & Dehnen-Schmutz, Katharina, 2014. "Explaining the rank order of invasive plants by stakeholder groups," Ecological Economics, Elsevier, vol. 105(C), pages 330-341.
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    15. Bairagi, Subir K. & Mohanty, Samarendu & Ynion, Jhoanne & Demont, Matty, 2017. "Determinants of Consumer Preferences for Rice Attributes: Evidence from South and Southeast Asia," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258384, Agricultural and Applied Economics Association.
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    17. Arie Beresteanu, 2016. "Efficeincy Gains in Rank-ordered Multinomial Logit Models," Working Paper 5878, Department of Economics, University of Pittsburgh.

    More about this item


    discrete choice models; random utility; stated preferences;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection


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