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What does the multinomial logit model really measure?

Author: Vanhonacker, Wilfried R. INSEAD Area: Marketing Series: Working Paper ; 93/26/EPS/MKT/SM Publisher: Fontainebleau : INSEAD, 1993.Language: EnglishDescription: 21 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: The multinational Logit Model of choice has been used extensively in the literature. The traditional interpretation is that the model describes the probability of choosing a specific alternative out of given set of considered alternatives (the "consideration set"). This paper shows that when the decision maker experiences uncertainty in defining the consideration set, the choice model is still MNL under relatively weak assumptions. However, in such instances, one cannot disentangle in the actual MNL predictions what comes from real preferences and what comes from characteristics of the imperfectly carried out consideration set generation task. This observation has important practical implications, since implied marketing efforts differ substantially depending on whether they aim at adaptation to preferences or at manipulation of the consideration set generation
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The multinational Logit Model of choice has been used extensively in the literature. The traditional interpretation is that the model describes the probability of choosing a specific alternative out of given set of considered alternatives (the "consideration set"). This paper shows that when the decision maker experiences uncertainty in defining the consideration set, the choice model is still MNL under relatively weak assumptions. However, in such instances, one cannot disentangle in the actual MNL predictions what comes from real preferences and what comes from characteristics of the imperfectly carried out consideration set generation task. This observation has important practical implications, since implied marketing efforts differ substantially depending on whether they aim at adaptation to preferences or at manipulation of the consideration set generation

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