Advanced microeconometrics of discrete choices

Objectives

This course is a continuation of the Econometrics 2A and Applied Microeconometrics courses. Its main objective is to present recent advances in discrete choice modeling.

After a brief review of the structure of econometric discrete choice models (models with random utilities) and the reference model used by econometricians (the Multinomial Logit model), the course aims to present two essential extensions of the reference discrete choice models: (a) discrete choice models with random parameters and (b) discrete choice models with agglomeration and/or congestion effects. These models are used in all areas of applied micro-econometrics: choice of transport modes and routes, choice of business or residential location, modeling of market shares under imperfect competition, choice of recreational sites, etc.

The course will address issues relating to the specification and estimation of these models, both theoretically and through detailed examples.

Course outline

1. Reminders
a. Random utility models
b. The Multinomial Logit model
c. The case of large choice sets

2. Models with random parameters
a. Interest and specification of random parameter models
b. Continuous mixing law: MV estimation
c. Discrete mixing law: estimation by the MV via the EM algorithm
d. Some practical aspects
3. Location models with congestion and/or agglomeration effects
a. Congestion and agglomeration effects and equilibria
b. Specification and estimation of discrete choice models with congestion or agglomeration effects
4. Supplement. Market share models

Prerequisites

Econometrics 2A, applied microeconometrics, microeconomics, advanced microeconometrics