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Tests for the consistency of three-level nested logit models with utility maximization

Author

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  • María José Gil-Moltó

    (University of St Andrews)

  • Arne Risa Hole

    (University of St Andrews)

Abstract

This paper provides necessary conditions for testing the local consistency of three-level nested logit models with random utility maximization. We find that for a model with two sub-nests per nest the conditions can lead to a substantial increase in the range of acceptable dissimilarity parameters, irrespective of the number of alternatives per sub-nest.

Suggested Citation

  • María José Gil-Moltó & Arne Risa Hole, 2003. "Tests for the consistency of three-level nested logit models with utility maximization," Econometrics 0312001, University Library of Munich, Germany, revised 08 Jan 2004.
    • Handle: RePEc:wpa:wuwpem:0312001
    Note: Type of Document - ; prepared on WinXP; to print on LaserJet IIIp; pages: 13
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    References listed on IDEAS

    as
    1. Herriges, Joseph A. & Kling, Catherine L., 1996. "Testing the consistency of nested logit models with utility maximization," Economics Letters, Elsevier, vol. 50(1), pages 33-39, January.
    2. Catherine L. Kling & Joseph A. Herriges, 1995. "An Empirical Investigation of the Consistency of Nested Logit Models with Utility Maximization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(4), pages 875-884.
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    4. Kao-Lee Liaw & William Frey, 2003. "Location of adult children as an attraction for black and white elderly return and onward migrants in the United States: Application of a three-level nested logit model with census data," Mathematical Population Studies, Taylor & Francis Journals, vol. 10(2), pages 75-98.
    5. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
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    7. 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.
    8. Stuart A. Gabriel & Gary Painter, 2003. "Intra-Metropolitan Mobility, Residential Location and Homeownership Choice Among Minority and White Households: Estimates of a Nested Multinomial Logit Model," Working Paper 8618, USC Lusk Center for Real Estate.
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    10. 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.
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    Cited by:

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    More about this item

    Keywords

    Nested logit; Discrete choice; Random utility maximization;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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