Integration of choice probabilities in logit

Paolo Delle Site

Economics Letters, 2013, vol. 120, issue 1, 57-60

Abstract: We find for logit with income effects a function that generates choice probabilities via Roy’s identity. We show that it possesses all the properties to qualify as an indirect utility, it has a closed-form expression for the practically interesting translog specification of the systematic utilities, it reduces in the case without income effects to the expectation of the maximum utility. We discuss the use of the findings in welfare measurement and the extension to observed heterogeneity and mixed logit.

Keywords: Logit; Income effects; Social utility; Roy’s identity (search for similar items in EconPapers)
JEL-codes: C25 D11 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:120:y:2013:i:1:p:57-60

DOI: 10.1016/j.econlet.2013.03.027

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