Investigating the Competitive Assumption of Multinomial Logit Models of Brand Choice by Nonparametric Modeling

Makoto Abe, Yasemin Boztug and Lutz Hildebrandt
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Makoto Abe: Faculty of Economics, University of Tokyo

No CIRJE-F-193, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: The Multinomial Logit (MNL) model is still the only viable option to study nonlinear responsiveness of utility to covariates nonparametrically. This research investigates whether MNL structure of inter-brand competition is a reasonable assumption, so that when the utility function is estimated nonparametrically, the IIA assumption does not bias the result. For this purpose, the authors compare the performance of two comparable nonpara-metric choice models that differ in one aspect: one assumes MNL com-petitive structure and the other infers the pattern of brands' competition nonparametrically from data.

Pages: 21 pages
Date: 2003-02
New Economics Papers: this item is included in nep-dcm and nep-ecm
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Journal Article: Investigating the competitive assumption of Multinomial Logit models of brand choice by nonparametric modeling (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2003cf193

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