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Technical Note—Two Properties of the Nested Logit Model

Author

Listed:
  • Carlos F. Daganzo

    (Institute of Transportation Studies, University of California, Berkeley, California 94720)

  • Michael Kusnic

    (Marketing and Product Planning Staff, General Motors Corporation, Detroit, Michigan 48202)

Abstract

This paper presents simple formulae for the utility covariances of the nested logit (NL) model, and based on these defines a “scaled tree” that can be used as an aid for the interpretation of estimation results. The paper also shows that the full information log-likelihood function of linear-in-the-parameters NL models is concave in the utility parameters. Thus, conditional on the scaling parameters, full information maximum likelihood (FIML) searches cannot get trapped in local maxima.

Suggested Citation

  • Carlos F. Daganzo & Michael Kusnic, 1993. "Technical Note—Two Properties of the Nested Logit Model," Transportation Science, INFORMS, vol. 27(4), pages 395-400, November.
    • Handle: RePEc:inm:ortrsc:v:27:y:1993:i:4:p:395-400
    DOI: 10.1287/trsc.27.4.395
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    Cited by:

    1. Vinit Kumar Mishra & Karthik Natarajan & Dhanesh Padmanabhan & Chung-Piaw Teo & Xiaobo Li, 2014. "On Theoretical and Empirical Aspects of Marginal Distribution Choice Models," Management Science, INFORMS, vol. 60(6), pages 1511-1531, June.
    2. Youssef M. Aboutaleb & Moshe Ben-Akiva & Patrick Jaillet, 2020. "Learning Structure in Nested Logit Models," Papers 2008.08048, arXiv.org.
    3. Heng Zhang & Paat Rusmevichientong & Huseyin Topaloglu, 2020. "Assortment Optimization Under the Paired Combinatorial Logit Model," Operations Research, INFORMS, vol. 68(3), pages 741-761, May.
    4. Aydın Alptekinoğlu & John H. Semple, 2021. "Heteroscedastic Exponomial Choice," Operations Research, INFORMS, vol. 69(3), pages 841-858, May.
    5. R.K. Blamey & J.W. Bennett & J.J. Louviere & M.D. Morrison & J.C. Rolfe, 2002. "Attribute Causality in Environmental Choice Modelling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(2), pages 167-186, October.
    6. José Luis Espinosa-Aranda & Ricardo García-Ródenas & María Luz López-García & Eusebio Angulo, 2018. "Constrained nested logit model: formulation and estimation," Transportation, Springer, vol. 45(5), pages 1523-1557, September.

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