Instability in mixed logit demand models

被引:4
|
作者
McFadden, Daniel [1 ]
机构
[1] Univ Calif Berkeley, Berkeley, CA 94720 USA
关键词
Mixed logit; Market simulation; DIFFERENTIATED PRODUCT DEMAND; WILLINGNESS-TO-PAY; ESTIMATOR; PRICES;
D O I
10.1016/j.jocm.2022.100353
中图分类号
F [经济];
学科分类号
02 ;
摘要
When a mixed logit demand model is used to estimate market-clearing prices, the high influence of the left tail of the random price coefficient can lead to numerical and statistical instability. I show this is an issue with any mixing distribution whose price coefficient is not bounded away from zero. I give conditions under which market equilibrium prices implied by mixed logit models exist, and show they are satisfied for lognormal mixing and some cases of truncated normal mixing. However, even when market equilibria exist, these models can be unstable and produce statistically unreliable and economically implausible conclusions.
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页数:15
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