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Empirical Investigation of the Consistency of Nested Logit Models with Utility Maximization (An)

Author

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  • Kling, Catherine L.
  • Herriges, Joseph A.

Abstract

Global conditions under which nested logit models are consistent with utility maximization are provided by Daly and Zachary and by McFadden. Recently, Borsch-Supan and Herriges and Kling have provided conditions under which a nested logit model is locally consistent. However, previous work has not discussed implementation of these conditions. Here, three alternative approaches to checking and formally testing for the consistency conditions using classical statistics are investigated. In addition, a Bayesian approach to interpreting and imposing the local consistency conditions is provided. The application is based on anglers' choices regarding sportfishing alternatives in southern California. Key words: discrete choice models, environmental valuation, nested logit models, recreation demand.

Suggested Citation

  • Kling, Catherine L. & Herriges, Joseph A., 1995. "Empirical Investigation of the Consistency of Nested Logit Models with Utility Maximization (An)," Staff General Research Papers Archive 1499, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:1499
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    Cited by:

    1. Koppelman, Frank S. & Wen, Chieh-Hua, 1998. "Alternative nested logit models: structure, properties and estimation," Transportation Research Part B: Methodological, Elsevier, vol. 32(5), pages 289-298, June.
    2. van Bueren, Martin & Bennett, Jeffrey W., 2004. "Towards the development of a transferable set of value estimates for environmental attributes," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 1), pages 1-32.
    3. Lahiri, Kajal & Gao, Jian, 2002. "Bayesian analysis of nested logit model by Markov chain Monte Carlo," Journal of Econometrics, Elsevier, vol. 111(1), pages 103-133, November.
    4. Phaneuf, Daniel James, 1997. "Generalized corner solution models in recreation demand," ISU General Staff Papers 1997010108000013022, Iowa State University, Department of Economics.
    5. Gil-Molto, Maria Jose & Hole, Arne Risa, 2004. "Tests for the consistency of three-level nested logit models with utility maximization," Economics Letters, Elsevier, vol. 85(1), pages 133-137, October.
    6. Newbold, Stephen C. & Massey, D. Matthew, 2010. "Recreation demand estimation and valuation in spatially connected systems," Resource and Energy Economics, Elsevier, vol. 32(2), pages 222-240, April.
    7. Kurt Schwabe & Peter Schuhmann & Roy Boyd & Khosrow Doroodian, 2001. "The Value of Changes in Deer Season Length: An Application of the Nested Multinomial Logit Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 131-147, June.
    8. Romero-Medina, Antonio & Mora, Ricardo & Machado, Matilde P., 2006. "A methodology to measure hospital quality using physicians' choices over training vacancies," UC3M Working papers. Economics we060201, Universidad Carlos III de Madrid. Departamento de Economía.
    9. repec:eee:jeeman:v:88:y:2018:i:c:p:159-179 is not listed on IDEAS
    10. Hu, Chaoran & Chen, Kevin Z. & Reardon, Thomas, 2015. "Is There a City Size Bias? Destination Choice of Rural off-Farm Workers, Evidences from Three Areas in Rural China," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205535, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    11. Matilde P. Machado & Ricardo Mora & Antonio Romero-Medina, 2012. "Can We Infer Hospital Quality From Medical Graduates’ Residency Choices?," Journal of the European Economic Association, European Economic Association, vol. 10(6), pages 1400-1424, December.
    12. Christiadi & Brian Cushing, 2007. "Conditional Logit, IIA, and Alternatives for Estimating Models of Interstate Migration," Working Papers Working Paper 2007-04, Regional Research Institute, West Virginia University.
    13. Chen, Anning, 2011. "Reliable GPS Integer Ambiguity Resolution," University of California Transportation Center, Working Papers qt9gs0t2f9, University of California Transportation Center.
    14. Schwabe, Kurt A. & Schuhmann, Peter W., 1999. "The Value Of Increasing The Length Of Deer Season In Ohio," 1999 Annual meeting, August 8-11, Nashville, TN 21574, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. repec:wsi:wschap:9789813141094_0009 is not listed on IDEAS
    16. Martin, Elliott William, 2009. "New Vehicle Choice, Fuel Economy and Vehicle Incentives: An Analysis of Hybrid Tax Credits and the Gasoline Tax," University of California Transportation Center, Working Papers qt5gd206wv, University of California Transportation Center.
    17. Elizabeth Fadali & W. Douglass Shaw, 1998. "Can Recreation Values For A Lake Constitute A Market For Banked Agricultural Water?," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 433-441, October.
    18. W. Shaw & Michael Ozog, 1999. "Modeling Overnight Recreation Trip Choice: Application of a Repeated Nested Multinomial Logit Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(4), pages 397-414, June.
    19. Judith M. Dean & Mary E. Lovely & Hua Wang, 2017. "Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China," World Scientific Book Chapters,in: International Economic Integration and Domestic Performance, chapter 9, pages 155-167 World Scientific Publishing Co. Pte. Ltd..
    20. Martin, Elliot William, 2009. "New Vehicle Choices, Fuel Economy and Vehicle Incentives: An Analysis of Hybrid Tax Credits and Gasoline Tax," University of California Transportation Center, Working Papers qt6sz198c2, University of California Transportation Center.
    21. Bente Halvorsen, 2000. "Comparing Ranking and Contingent Valuation for Valuing Human Lives, Applying Nested and Non-Nested Logit Models," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(1), pages 1-19, September.

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