On the Representation of the Nested Logit Model

Alfred Galichon (1, 2)

1 ECON - Département d'économie (Sciences Po)
2 NYU - New York University [New York]

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.

Mots clés: Random utility models; Multinomial choice; Nested logit model

Domaines: Economies et finances

Alfred Galichon. On the Representation of the Nested Logit Model. Econometric Theory, 2022, 38 (2), pp.370-380. ⟨10.1017/S026646662000047X⟩. ⟨hal-03893069⟩