Relation Between EBA and Nested Logit Models
Operations Research · 2017 · Volume 65 · Issue 3
Abstract
We show that elimination by aspects (EBA) generalizes nested logit and cross-nested logit models. The latter two models are equivalent to a special case of EBA called preference trees. The transformations between preference trees and nested logit models become more complex when the utilities of alternatives are functions of covariates. In this case, a simple model in one domain corresponds to a complex model in the other. An extended EBA model, in which the utilities of alternatives are functions of covariates, represents a two-stage choice process. Alternatives are first screened using a probabilistic lexicographic rule and then compared in terms of their compensatory utilities. We provide a typology of the relations between EBA and other logit models, and we discuss issues concerning estimation, statistical testing, and data collection. We describe an application illustrating (1) the process of constructing a preference tree with covariates and (2) the different implications obtained from a preference tree and a comparable nested logit model.
Keywords
elimination by aspects, preference trees, hierarchical elimination model, nested logit model, cross-nested logit model, two-stage choice model, order independence, independence of irrelevant alternatives
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