Integrating a Pareto-Distributed Scale into the Mixed Logit Model: A Mathematical Concept

Taro Ohdoko and Satoru Komatsu
Additional contact information
Taro Ohdoko: Department of Economics on Sustainability, Faculty of Economics, Dokkyo University, 1-1, Gakuen-cho, Soka-shi 340-0042, Saitama, Japan

Mathematics, 2023, vol. 11, issue 23, 1-22

Abstract: A generalized multinomial logit (G-MNL) model is proposed to alleviate the four challenges inherent to the conditional logit model, including (1) simultaneous unidentifiability, (2) the immediacy of decision-making, (3) the homogeneity of preferences in unobservable variables, and (4) the independence of irrelevant alternatives. However, the G-MNL model has some restrictions that are caused by the assumed logit scale of the lognormal distribution used in the G-MNL model. We propose a mixed logit with integrated Pareto-distributed scale (MIXL-iPS) model to address the restriction of the G-MNL model by introducing a logit scale in accordance with the Pareto distribution type I with an expected value of 1. We have clarified the mathematical properties and examined the distributional properties of the novel MIXL-iPS model. The results suggest that the MIXL-iPS model is a model in which the instability in the estimation of the G-MNL model is modified. Moreover, the apparent preference parameter was confirmed to have a skewed distribution in general in the MIXL-iPS model. In addition, we confirm that in the MIXL-iPS model, bounded rationality is reasonably well represented, as many individuals have below-average choice consistency.

Keywords: additive random utility model; preference heterogeneity; scale heterogeneity; Pareto distribution type I; choice consistency; logit scale (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7390/11/23/4727/pdf (application/pdf)
https://www.mdpi.com/2227-7390/11/23/4727/ (text/html)

Related works:
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:gam:jmathe:v:11:y:2023:i:23:p:4727-:d:1285320

Access Statistics for this article

Mathematics is currently edited by Ms. Emma He

More articles in Mathematics from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().