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Transition choice probabilities in logit

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  • Delle Site, Paolo
  • Salucci, Marco Valerio

Abstract

We consider the widely used multinomial logit model with i.i.d. Gumbel random terms. Transition choice probabilities, i.e. probabilities of choosing alternative i in the first choice and alternative j in the second, are available in analytic form in the two extreme cases where the random terms of each alternative are independent or perfectly correlated across choices. We extend these results and provide the transition probabilities in analytic form in the case where the random terms follow a bi-extremal distribution with correlation coefficient varying in the full positive range between zero and one.

Suggested Citation

  • Delle Site, Paolo & Salucci, Marco Valerio, 2015. "Transition choice probabilities in logit," Economics Letters, Elsevier, vol. 126(C), pages 135-139.
    • Handle: RePEc:eee:ecolet:v:126:y:2015:i:c:p:135-139
    DOI: 10.1016/j.econlet.2014.12.002
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    References listed on IDEAS

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    1. de Palma, Andre & Kilani, Karim, 2005. "Switching in the logit," Economics Letters, Elsevier, vol. 88(2), pages 196-202, August.
    2. André Palma & Karim Kilani, 2011. "Transition choice probabilities and welfare analysis in additive random utility models," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 46(3), pages 427-454, April.
    3. Delle Site, Paolo & Salucci, Marco Valerio, 2013. "Transition choice probabilities and welfare analysis in random utility models with imperfect before–after correlation," Transportation Research Part B: Methodological, Elsevier, vol. 58(C), pages 215-242.
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    Cited by:

    1. Paolo Delle Site, 2017. "On the Equivalence Between SUE and Fixed-Point States of Day-to-Day Assignment Processes with Serially-Correlated Route Choice," Networks and Spatial Economics, Springer, vol. 17(3), pages 935-962, September.
    2. Paolo Delle Site & André de Palma & Karim Kilani, 2021. "Consumers’ welfare and compensating variation: survey and mode choice application," THEMA Working Papers 2021-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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    More about this item

    Keywords

    Discrete choice; Random utility; Multinomial logit; Transition probability; Bi-extremal distribution;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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