Discrete choice models with multiplicative error terms

The conditional indirect utility of many random utility maximization (RUM) discrete choice models is specified as a sum of an index V depending on observables and an independent random term [epsilon]. In general, the universe of RUM consistent models is much larger, even fixing some specification of V due to theoretical and practical considerations. In this paper, the authors explore an alternative RUM model where the summation of V and [epsilon] is replaced by multiplication. This is consistent with the notion that choice makers may sometimes evaluate relative differences in V between alternatives rather than absolute differences. The authors develop some properties of this type of model and show that in several cases the change from an additive to a multiplicative formulation, maintaining a specification of V, may lead to a large improvement in fit, sometimes larger than that gained from introducing random coefficients in V.

• Record URL:
  • http://www.sciencedirect.com/science/article/B6V99-4V87DGJ-1/2/a178290353e36aa7d701452e4b537f06
• Availability:
  • Find a library where document is available. Order URL: http://worldcat.org/issn/01912615
• Supplemental Notes:
  • Abstract reprinted with permission from Elsevier
• Authors:
  • Fosgerau, M
  • Bierlaire, M
• Publication Date: 2009-6

Language

• English

Media Info

• Media Type: Print
• Features: Appendices; References; Tables;
• Pagination: pp 494-505
• Serial:
  • Transportation Research Part B: Methodological
  • Volume: 43
  • Issue Number: 5
  • Publisher: Elsevier
  • ISSN: 0191-2615
  • Serial URL: http://www.sciencedirect.com/science/journal/01912615

Subject/Index Terms

• TRT Terms: Definitions; Errors; Mathematical models
• Uncontrolled Terms: Discrete choice; Random utility
• Subject Areas: Highways; Planning and Forecasting;

Filing Info

• Accession Number: 01129676
• Record Type: Publication
• Files: TRIS
• Created Date: May 29 2009 7:41AM