[Limdep Nlogit List] nested logit inclusive value restrictions

Kandice L. Kleiber kleiberk at onid.orst.edu
Fri Jul 3 11:36:44 EST 2009

Hi -

I'm struggling with setting up my nested logit model.

Currently my tree = cs(corn, soy), wheat, other.
My dependent variable is a proportion, and my independent variables  
are all observation specific (do not vary across choices).

However, after doing some reading (Hunt, 2000), I think that I have  
not been using the restrictions that might need to be set in order to  
estimate the model correctly.

I'm wondering (and I'm not sure if LimDep reads this the same way) if  
I should change my tree structure to
tree= cs(corn, soy), wh(wheat), ot(other)
to indicate that my model is a partially degenerate model.  After  
reading Hunt (2000) (deals particularly with partial degeneracy) I  
think I need to know more about the normalization that is going on in  
the NLOGIT program.

I've come across the RU1, RU2, and RU3 commands.  Is one of the these  
the default for the NLogit program?  I think that I would want to use  
RU1 - what is an example of where someone would choose to use RU2 and  

Finally, I think I would need to set the restriction on the inclusive  
value parameters such that IV(wh)=IV(ot)=1 and then let LimDep  
estimate IV(cs).  LimDep won't restrict those parameters on it's  
own ... right?

Sorry for the confusion, but thank you for your help!

Kandice Kleiber

Kandice L. Kleiber
Graduate Teaching Assistant
Department of Economics
Oregon State University
e: kleiberk at onid.orst.edu
w: 541.737.6628

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