Estimating “tree” logit models

TL;DR: This paper presents a new estimation procedure, employing the maximum likelihood criterion, for the estimation of tree logit models, and indicates both the usefulness of the method in deriving improved models, relative to the more familiar sequential estimations, and its practicality and speed of operation on main-frame, minicomputers and microcomputers.

Abstract: The existence of the “tree” generalisation of the multinomial logit model, its consistency with theories of “rational” human behaviour, as well as the advantages offered in terms of more realistic modelling by this model form, have all been known for some time. Although a few studies have applied tree logit models, however, applications have been restricted by practical and theoretical difficulties in the estimation of these models, in particular with the sequential estimation that has normally been necessary. This paper presents a new estimation procedure, employing the maximum likelihood criterion, for the estimation of tree logit models. The procedure is based on a simple notation for the tree structure and is believed to be original. It offers the possibility of estimating simultaneously all the parameters of general tree logit structures, without restriction on the number of levels but allowing the user to impose constraints of parameter equality where required. Results are presented indicating both the usefulness of the method in deriving improved models, relative to the more familiar sequential estimations, and its practicality and speed of operation on main-frame, minicomputers and microcomputers.