Lower-order logsums

André de Palma () and Karim Kilani ()
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Karim Kilani: LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM]

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Abstract: The logsum formula, which provides the expected maximum utility for the multinomial logit model, is often used as a measure of welfare. We provide here a closed form formula of the welfare measure of an individual who has not access to his first-best choice, but has access to his rth-best choice, r = 2, ...n, where n is the number of alternatives. The derivation is based on a standard identity in order statistics.

Keywords: Discrete choice models; Gumbel distribution; Logit; Logsum; Order statistics (search for similar items in EconPapers)
Date: 2012-04-23
New Economics Papers: this item is included in nep-dcm
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