[Limdep Nlogit List] V/v: Nlogit without differing attributes

[ho quoc Chinh]

Dear Kandice.

It does not matter if you just have explanatory variables which are similar across alternatives. The model normally works as long as your specification is suitable with nest logit theory, that is each nest  must be seen as a MNL model. Then you should set at least one of elemental alternatives (corn, soy, wheat, other) equal to zero; all of the remaining alternatives are specified as normal. In your problem, I think the following specification is reasonable:

Nlogit;
start=logit;
RU1;
model:
U(corn)=asc_c+...../
U(wheat)=asc_w+.../
U(other)=asc_o+....$

It's no need to specify utility function at higher level (branch level, that is U(cs)). The probability of choosing higher level is already concerned in the structure of Nest logit model. What you have to take into consideration is whether or not IV parameter of your tree is larger than 1.0, which is neccessary to satisfy random utility theory.

By the way, I think that you misunderstood the meaning of "normalization" in NL model. It means that we normalize the IV of lower level or upper level to 1.0 instead of setting one of the alternatives in each level to zero as you though.

Best regards,

Chinh.
Nagoya University, Department of Civil Engineering.
Transportation Planning and Engineering lab.

--- Thứ 5, 25/06/09, Kandice L. Kleiber <kleiberk at onid.orst.edu> đã viết:

Từ: Kandice L. Kleiber <kleiberk at onid.orst.edu>
Chủ đề: [Limdep Nlogit List] Nlogit without differing attributes
Đến: "Limdep and Nlogit Mailing List" <limdep at limdep.itls.usyd.edu.au>
Ngày: Thứ Năm, 25 tháng 6, 2009, 4:26

Hi -

I'm trying to set up a nested logit.  My data, however, does not  
contain any variables that differ across choices.  My tree = cs (corn,  
soy), wheat, other.  The NLogit manual provides examples where some  
variables differ across choices, however this set-up doesn't work when  
all of the variables have the same value across differing choices.

Is it reasonable to set up the model excluding the choices that I want  
to normalize on?  For example, if I set up my model following the  
NLogit manual, I would have:
Model:
U(corn)
U(soy)
U(cs)
U(wheat)
U(other)

Since my variables do not vary across choices, can I instead set up  
like:
Model:
U(corn)
U(cs)
U(wheat)

Thus normalizing on the lower level with soy, and on the upper level  
with other.

Any input is appreciated.  Thank you!
Kandice.

---
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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