Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25218
Authors: 
Silberhorn, Nadja
Boztuğ, Yasemin
Hildebrandt, Lutz
Year of Publication: 
2007
Series/Report no.: 
SFB 649 discussion paper 2007,046
Abstract: 
The paper discusses the nested logit model for choices between a set of mutually exclusive alternatives (e.g. brand choice, strategy decisions, modes of transportation, etc.). Due to the ability of the nested logit model to allow and account for similarities between pairs of alternatives, the model has become very popular for the empirical analysis of choice decisions. However the fact that there are two different specifications of the nested logit model (with different outcomes) has not received adequate attention. The utility maximization nested logit (UMNL) model and the non-normalized nested logit (NNNL) model have different properties, influencing the estimation results in a different manner. This paper introduces distinct specifications of the nested logit model and indicates particularities arising from model estimation. The effects of using various software packages on the estimation results of a nested logit model are shown using simulated data sets for an artificial decision situation.
Subjects: 
nested logit model
utility maximization nested logit
non- normalized nested logit
simulation study
JEL: 
C13
C51
C87
M31
Document Type: 
Working Paper

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