CIRJE-F-193 "Investigating the Competitive Assumption of Multinomial Logit Models of Brand Choice by Nonparametric Modeling"
Author Name Abe, Makoto, Yasemin Boztug and Lutz Hildebrandt
Date February 2003
Full Paper PDF file@
Remarks Subsequently published as "Investigating the Competitive Assumption of Multinomial Logit Models of Brand Choice by Nonparametric Modeling", Computational Statistics, 19(4), pp.635-657, 2004 (with Yasemin Boztug and Lutz Hildebrandt).
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.


A