On the Relation Between Several Discrete Choice Models

Operations Research

22 Pages Posted: 7 Mar 2015 Last revised: 14 Mar 2017

See all articles by Guiyun Feng

Guiyun Feng

University of Minnesota - Minneapolis - Industrial & System Engineering

Xiaobo Li

National University of Singapore

Zizhuo Wang

The Chinese University of Hong Kong, Shenzhen

Date Written: March 5, 2015

Abstract

In this paper, we study the relation between several well known classes of discrete choice models, namely the random utility model (RUM), the representative agent model (RAM) and the semi-parametric choice model (SCM). Using a welfare based model as an intermediate, we show that the RAM and the SCM are equivalent. Furthermore, we show that both models as well as the welfare based model strictly subsume the random utility model when there are three or more alternatives, while the four are equivalent when there are only two alternatives. Thus, this paper presents a complete picture on the relation between these choice models.

Keywords: welfare function, random utility model, representative agent model, semi-parametric choice model

Suggested Citation

Feng, Guiyun and Li, Xiaobo and Wang, Zizhuo, On the Relation Between Several Discrete Choice Models (March 5, 2015). Operations Research, Available at SSRN: https://ssrn.com/abstract=2574466 or http://dx.doi.org/10.2139/ssrn.2574466

Guiyun Feng

University of Minnesota - Minneapolis - Industrial & System Engineering ( email )

111 Church Street S.E.
Minneapolis, MN 55455
United States

Xiaobo Li

National University of Singapore ( email )

10 Kent Ridge Crescent
Singapore, 115260
Singapore

Zizhuo Wang (Contact Author)

The Chinese University of Hong Kong, Shenzhen ( email )

2001 Longxiang Road
Longgang District
Shenzhen, Guangdong 517182
China

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