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ON THE REPRESENTATION OF THE NESTED LOGIT MODEL

Published online by Cambridge University Press:  11 January 2021

Alfred Galichon
Alfred Galichon*
Affiliation:
New York University Sciences Po
*
Address correspondence to Alfred Galichon, Departments of Economics and Mathematics, New York University, New York, NY, USA; e-mail: ag133@nyu.edu.
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Abstract

In this paper, we give a two-line proof of a long-standing conjecture of Ben-Akiva in his 1973 PhD thesis regarding the random utility representation of the nested logit model, thus providing a renewed and straightforward textbook treatment of that model. As an application, we provide a closed-form formula for the correlation between two Fréchet random variables coupled by a Gumbel copula.

Type
MISCELLANEA
Information
Econometric Theory , Volume 38 , Issue 2 , April 2022 , pp. 370 - 380
Copyright
© The Author(s), 2021. Published by Cambridge University Press

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Footnotes

Date: November 12, 2020 (First draft: 7/2019). Funding from NSF grant DMS-1716489 as well as ERC grant CoG-866274 is acknowledged. The author is thankful to the editor (Peter Phillips) and two anonymous reviewers, as well as Kenneth Train, Mogens Fosgerau, Lars-Göran Mattsson, Bernard Salanié and Jörgen Weibull for helpful comments, and especially to Matt Shum for pointing out the important reference to Cardell's paper after a first version of this paper was circulated.

References

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