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An Empirical Investigation of the Consistency of Nested Logit Models with Utility Maximization
Author(s) -
Kling Catherine L.,
Herriges Joseph A.
Publication year - 1995
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243810
Subject(s) - consistency (knowledge bases) , econometrics , nested logit , utility maximization , mixed logit , logit , maximization , logistic regression , bayesian probability , statistics , computer science , mathematics , mathematical optimization , mathematical economics , artificial intelligence
Abstract Global conditions under which nested logit models are consistent with utility maximization are provided by Daly and Zachary and by McFadden. Recently, Börsch‐Supan and Herriges and Kling have provided conditions under which a nested logit model is locally consistent. However, previous work has not discussed implementation of these conditions. Here, three alternative approaches to checking and formally testing for the consistency conditions using classical statistics are investigated. In addition, a Bayesian approach to interpreting and imposing the local consistency conditions is provided. The application is based on anglers' choices regarding sportfishing alternatives in southern California.