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https://cdr.lib.unc.edu/indexablecontent/uuid:008129bb-c121-47ca-9671-3396eb655b2c
In an MNL model, a predictor like religion is fixed across the choices, but the effect of the predictor is different for each choice. So religion may be an important consideration of an individual when they evaluate the Republican party, but may be less important when they evaluate the Democrats or Greens. In order to consider both types of independent variables at once, statisticians have 6 developed a hybrid logit model. Under a hybrid model the latent variables take the form Uij = βjxi + γzij + εij . (3) In other words, a hybrid model simply combines MNL and conditional logit by adding the two together in the deterministic part of the model.
file:///C:/Users/msfcfname/Downloads/MDM_paper_secondRevision_MS%20(1).pdf
Submitted to Management Science manuscript MS-MS-12-00426.R2 On Theoretical and Empirical Aspects of Marginal Distribution Choice Models (Authors’ names blinded for peer review) In this paper, we study the properties of a recently proposed class of semiparametric discrete choice models (referred to as the Marginal Distribution Model), by optimizing over a family of joint error distributions with prescribed marginal distributions. Surprisingly, the choice probabilities arising from the family of Generalized Extreme Value models can be obtained from this approach, despite the difference in assumptions on the underlying probability distributions. We use this connection to develop flexible and general choice models to incorporate respondent and product/attribute level heterogeneity in both partworths and scale parameters in the choice model. Furthermore, the extremal distributions obtained from the MDM can be used to approximate the Fisher’s Information Matrix to obtain reliable standard error estimates of the partworth parameters, without having to bootstrap the method. We use various simulated and empirical datasets to test the performance of this approach. We evaluate the performance against the classical Multinomial Logit, Mixed Logit, and a machine learning approach developed by Evgeniou et al. (13) (for partworth heterogeneity). Our numerical results indicate that MDM provides a practical semi-parametric alternative to choice modeling
https://cdr.lib.unc.edu/indexablecontent/uuid:008129bb-c121-47ca-9671-3396eb655b2c
https://cdr.lib.unc.edu/indexablecontent/uuid:008129bb-c121-47ca-9671-3396eb655b2c
In an MNL model, a predictor like religion is fixed across the choices, but the effect of the predictor is different for each choice. So religion may be an important consideration of an individual when they evaluate the Republican party, but may be less important when they evaluate the Democrats or Greens. In order to consider both types of independent variables at once, statisticians have 6 developed a hybrid logit model. Under a hybrid model the latent variables take the form Uij = βjxi + γzij + εij . (3) In other words, a hybrid model simply combines MNL and conditional logit by adding the two together in the deterministic part of the model.
file:///C:/Users/msfcfname/Downloads/MDM_paper_secondRevision_MS%20(1).pdf
Submitted to Management Science manuscript MS-MS-12-00426.R2 On Theoretical and Empirical Aspects of Marginal Distribution Choice Models (Authors’ names blinded for peer review) In this paper, we study the properties of a recently proposed class of semiparametric discrete choice models (referred to as the Marginal Distribution Model), by optimizing over a family of joint error distributions with prescribed marginal distributions. Surprisingly, the choice probabilities arising from the family of Generalized Extreme Value models can be obtained from this approach, despite the difference in assumptions on the underlying probability distributions. We use this connection to develop flexible and general choice models to incorporate respondent and product/attribute level heterogeneity in both partworths and scale parameters in the choice model. Furthermore, the extremal distributions obtained from the MDM can be used to approximate the Fisher’s Information Matrix to obtain reliable standard error estimates of the partworth parameters, without having to bootstrap the method. We use various simulated and empirical datasets to test the performance of this approach. We evaluate the performance against the classical Multinomial Logit, Mixed Logit, and a machine learning approach developed by Evgeniou et al. (13) (for partworth heterogeneity). Our numerical results indicate that MDM provides a practical semi-parametric alternative to choice modeling
https://cdr.lib.unc.edu/indexablecontent/uuid:008129bb-c121-47ca-9671-3396eb655b2c
5.7.1 Informal Tests
A variety of informal tests can be applied to an estimated model. These tests are designed to
assess the reasonableness of the implications of estimated parameters. The most common tests
concern:
• The sign of parameters (do the associated variables have a positive or negative effect on
the alternatives with which they are associated?),
• The difference (positive or negative) within sets of alternative specific variables (does the
inclusion of this variable have a more or less positive effect on one alternative relative to
another?) and
• The ratio of pairs of parameters (is the ratio between the parameters of the correct sign
and in a reasonable range?).
5.7.1.1 Signs of Parameters
The most basic test of the estimation results is to examine the signs of the estimated parameters
with theory, intuition and judgment regarding the expected impact of the corresponding
variables. The estimated coefficients on the travel time and cost variables in Table 5-2 are
negative, as expected, implying that the utility of a mode decreases as the mode becomes slower
and/or more expensive. This, in turn, will reduce the choice probability of the corresponding
mode.
5.7.1.2 Differences in Alternative Specific Variable Parameters across Alternatives
We often have expectations about the impact of decision-maker characteristics on different
alternatives. For example, when analyzing mode choice, we expect a number of variables to be
more positive for automobile alternatives, especially Drive Alone, than for other alternatives.
These include income, automobile ownership, home ownership, single family dwelling unit, etc.
Since DA is the reference alternative in these models, we expect negative parameters on all
alternative specific income variables, with small values for the shared ride alternatives and larger
values for other alternatives, to reflect our intuition that increasing income will be associated
with decreased preference for all other alternatives relative to drive alone. All the estimated
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