A discrete choice model for partially ordered alternatives

Eleni Aristodemou and Adam Rosen

Quantitative Economics, 2022, vol. 13, issue 3, 863-906

Abstract: In this paper, we analyze a discrete choice model for partially ordered alternatives. The alternatives are differentiated along two dimensions: the first an unordered “horizontal” dimension, and the second an ordered “vertical” dimension. The model can be used in circumstances in which individuals choose among products of different brands, wherein each brand offers an ordered choice menu, for example, by offering products of varying quality. The unordered–ordered nature of the discrete choice problem is used to characterize the identified set of model parameters. Following an initial nonparametric analysis that relies on shape restrictions inherent in the ordered dimension of the problem, we then provide a specialized analysis for parametric specifications that generalize common ordered choice models. We characterize conditional choice probabilities as a function of model primitives with particular analysis focusing on cases in which unobservable taste for quality of each brand offering is multivariate normally distributed. We provide explicit formulae used for estimation and inference via maximum likelihood, and we consider inference based on Wald and quasi‐likelihood ratio statistics, the latter of which can be robust to a possible lack of point identification. An empirical illustration is conducted using data on razor blade purchases in which each brand has product offerings vertically differentiated by quality.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.3982/QE1497

Related works:
Working Paper: A discrete choice model for partially ordered alternatives (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:quante:v:13:y:2022:i:3:p:863-906

Ordering information: This journal article can be ordered from
https://www.econometricsociety.org/membership

Access Statistics for this article

More articles in Quantitative Economics from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().