Browsing by Subject "mixed discrete choice"
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Item Allowing for non-additively separable and flexible utility forms in multiple discrete-continuous models(2013-01) Bhat, Chandra R.; Castro, Marisol; Pinjari, Abdul RawoofMany consumer choice situations are characterized by the simultaneous demand for multiple alternatives that are imperfect substitutes for one another, along with a continuous quantity dimension for each chosen alternative. To model such multiple discrete-continuous choices, most multiple discrete-continuous models in the literature use an additively-separable utility function, with the assumption that the marginal utility of one good is independent of the consumption of another good. In this paper, we develop model formulations for multiple discrete-continuous choices that allow a non-additive utility structure, and accommodate rich substitution structures and complementarity effects in the consumption patterns. Specifically, three different nonadditive utility formulations are proposed based on alternative specifications and interpretations of stochasticity: (1) The deterministic utility random maximization (DU-RM) formulation, which considers stochasticity due to the random mistakes consumers make during utility maximization; (2) The random utility deterministic maximization (RU-DM) formulation, which considers stochasticity due to the analyst’s errors in characterizing the consumer’s utility function; and (3) The random utility random maximization (RU-RM) formulation, which considers both analyst’s errors and consumer’s mistakes within a unified framework. When applied to the consumer expenditure survey data in the United States, the proposed non-additively separable utility formulations perform better than the additively separable counterparts, and suggest the presence of substitution and complementarity patterns in consumption.Item The Multiple Discrete-Continuous Extreme Value (MDCEV) Model: Role of Utility Function Parameters, Identification Considerations, and Model Extensions(Elsevier, 2008) Bhat, Chandra R.Many consumer choice situations are characterized by the simultaneous demand for multiple alternatives that are imperfect substitutes for one another. A simple and parsimonious Multiple Discrete-Continuous Extreme Value (MDCEV) econometric approach to handle such multiple discreteness was formulated by Bhat (2005) within the broader Kuhn-Tucker (KT) multiple discrete-continuous economic consumer demand model of Wales and Woodland (1983). This paper examines several issues associated with the MDCEV model and other extant KT multiple discrete-continuous models. Specifically, the paper proposes a new utility function form that enables clarity in the role of each parameter in the utility specification, presents identification considerations associated with both the utility functional form as well as the stochastic nature of the utility specification, extends the MDCEV model to the case of price variation across goods and to general error covariance structures, discusses the relationship between earlier KT-based multiple discrete-continuous models, and illustrates the many technical nuances and identification considerations of the multiple discrete-continuous model structure through empirical examples. The paper also highlights the technical problems associated with the stochastic specification used in the KT-based multiple discrete-continuous models formulated in recent Environmental Economics papers.