1. consider estimation of demand model for transport
2. look at IIA assumption (potential pitt-falls)
3. extend with 3 types, check substitution patterns
4. consider max-rank substitution

We consider here discrete choices over a set of alernatives. THe utility of the agent is modeled as

# Discrete Choices

$u_i(j) = \beta X_i + \epsilon_{ij}$

and when the error term is type 2 extreme value:

$F(\epsilon_{ij}) = \exp( -\exp( -\epsilon_{ij} ) )$

the choice probability is given by

$Pr[j(i)^*=j] = \frac{ \exp[ u_i(j) ] }{ \sum_j' \exp[ u_i(j') ]}$

Armed with these tools we can tackle the data we are given.

## Data

library(AER)
## Warning: package 'AER' was built under R version 3.3.2
## Warning: package 'car' was built under R version 3.3.2
library(mlogit)
library(kableExtra)
## Warning: package 'kableExtra' was built under R version 3.3.2
library(knitr)
## Warning: package 'knitr' was built under R version 3.3.2
library(foreach)
data("TravelMode")
data = TravelMode

kable(data[1:10,])
individual mode choice wait vcost travel gcost income size
1 air no 69 59 100 70 35 1
1 train no 34 31 372 71 35 1
1 bus no 35 25 417 70 35 1
1 car yes 0 10 180 30 35 1
2 air no 64 58 68 68 30 2
2 train no 44 31 354 84 30 2
2 bus no 53 25 399 85 30 2
2 car yes 0 11 255 50 30 2
3 air no 69 115 125 129 40 1
3 train no 34 98 892 195 40 1

## Mlogit results

library(AER)
library(mlogit)
library(kableExtra)
library(knitr)
library(reshape2)
data("TravelMode")
TravelMode <- mlogit.data(TravelMode, choice = "choice", shape = "long", alt.var = "mode", chid.var = "individual")
data = TravelMode

## overall proportions for chosen mode
with(data, prop.table(table(mode[choice == TRUE])))
##
##       air     train       bus       car
## 0.2761905 0.3000000 0.1428571 0.2809524
## travel vs. waiting time for different travel modes
ggplot(data,aes(x=wait, y=travel)) + geom_point() + facet_wrap(~mode)

## Greene (2003), Table 21.11, conditional logit model
fit1 <- mlogit(choice ~ gcost + wait, data = data, reflevel = "car")
# fit1 <- mlogit(choice ~ gcost + wait | income, data = data, reflevel = "car")
# fit1 <- mlogit(choice ~ gcost + wait + income, data = data, reflevel = "car") # why doesn't it work?
summary(fit1)
##
## Call:
## mlogit(formula = choice ~ gcost + wait, data = data, reflevel = "car",
##     method = "nr", print.level = 0)
##
## Frequencies of alternatives:
##     car     air   train     bus
## 0.28095 0.27619 0.30000 0.14286
##
## nr method
## 5 iterations, 0h:0m:0s
## g'(-H)^-1g = 0.000221
## successive function values within tolerance limits
##
## Coefficients :
##                     Estimate Std. Error t-value  Pr(>|t|)
## air:(intercept)    5.7763487  0.6559187  8.8065 < 2.2e-16 ***
## train:(intercept)  3.9229948  0.4419936  8.8757 < 2.2e-16 ***
## bus:(intercept)    3.2107314  0.4496528  7.1405 9.301e-13 ***
## gcost             -0.0157837  0.0043828 -3.6013 0.0003166 ***
## wait              -0.0970904  0.0104351 -9.3042 < 2.2e-16 ***
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
##
## Log-Likelihood: -199.98
## Likelihood ratio test : chisq = 167.56 (p.value = < 2.22e-16)

## Nested logit

One way to test the assumption is to estimate without one alternative and see if it affects the parameters. For instance we can focus on whether air or train is chosen and estimate within.

fit.nested <- mlogit(choice ~ wait + gcost, TravelMode, reflevel = "car",
nests = list(fly = "air", ground = c("train", "bus", "car")),
unscaled = TRUE)

summary(fit.nested)
##
## Call:
## mlogit(formula = choice ~ wait + gcost, data = TravelMode, reflevel = "car",
##     nests = list(fly = "air", ground = c("train", "bus", "car")),
##     unscaled = TRUE)
##
## Frequencies of alternatives:
##     car     air   train     bus
## 0.28095 0.27619 0.30000 0.14286
##
## bfgs method
## 15 iterations, 0h:0m:0s
## g'(-H)^-1g = 6.59E-07
##
## Coefficients :
##                     Estimate Std. Error t-value  Pr(>|t|)
## air:(intercept)    7.0761993  1.1077730  6.3878 1.683e-10 ***
## train:(intercept)  5.0826937  0.6755601  7.5237 5.329e-14 ***
## bus:(intercept)    4.1190138  0.6290292  6.5482 5.823e-11 ***
## wait              -0.1134235  0.0118306 -9.5873 < 2.2e-16 ***
## gcost             -0.0308887  0.0072559 -4.2571 2.071e-05 ***
## iv.fly             0.6152141  0.1165753  5.2774 1.310e-07 ***
## iv.ground          0.4207342  0.1606367  2.6192  0.008814 **
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
##
## Log-Likelihood: -195
## Likelihood ratio test : chisq = 177.52 (p.value = < 2.22e-16)
data2 =copy(data)
I=paste(data2$mode)=="bus" # force other alternatives to mean value for (mm in c('car','train','air')) { #data2$gcost[paste(data2$mode)==mm] = mean(data2$gcost[paste(data2$mode)==mm]) data2$wait[paste(data2$mode)==mm] = mean(data2$wait[paste(data2$mode)==mm]) } # run a for lopp for different prices # save shares for each option rr = foreach(dprice = seq(-100,100,l=20), .combine = rbind) %do% { data2$gcost[I] = data$gcost[I] + dprice res = colMeans(predict(fit.nested,newdata=data2)) res['dprice'] = dprice res } rr = melt(data.frame(rr),id.vars = "dprice") ggplot(rr,aes(x=dprice,y=value,color=factor(variable))) + geom_line() ## Random coefficient model Letâ€™s try with 2 groups of people to run an EM C = acast(data,individual ~ mode,value.var="choice") C = C[,c(4,1,2,3)] p1=0.5 I = sample(unique(data$individua),nrow(data)/8)
I  =data\$individual %in% I

# we start with the very first mlogit (we randomly sub-sample to create some variation)
fit1 <- mlogit(choice ~ gcost , data = data[I,], reflevel = "car")
fit2 <- mlogit(choice ~ gcost , data = data[!I,], reflevel = "car")

liks = rep(0,15)
for (i in 1:15) {
# for each individual we compute the posterior probability given their data
p1v = predict(fit1,newdata=data)
p2v = predict(fit2,newdata=data)

p1v = rowSums(p1v * C)*p1
p2v = rowSums(p2v * C)*(1-p1)

liks[i] = sum(log(p1v+p2v))
#cat(sprintf("ll=%f\n",ll))

p1v  = p1v/(p1v+p2v)
p1v  = as.numeric( p1v %x% c(1,1,1,1) )

# finally we run the 2 mlogit with weights
fit1 <- mlogit(choice ~ gcost , data = data,weights = p1v, reflevel = "car")
fit2 <- mlogit(choice ~ gcost , data = data,weights = as.numeric(1-p1v), reflevel = "car")

p1 = mean(p1v)
}
print(fit1)
##
## Call:
## mlogit(formula = choice ~ gcost, data = data, weights = p1v,     reflevel = "car", method = "nr", print.level = 0)
##
## Coefficients:
##   air:(intercept)  train:(intercept)    bus:(intercept)
##          -5.73773            4.49929            2.57214
##             gcost
##          -0.16208
print(fit2)
##
## Call:
## mlogit(formula = choice ~ gcost, data = data, weights = as.numeric(1 -     p1v), reflevel = "car", method = "nr", print.level = 0)
##
## Coefficients:
##   air:(intercept)  train:(intercept)    bus:(intercept)
##          1.508232          -1.338424          -2.409212
##             gcost
##          0.030878
print(p1)
## [1] 0.6393051
plot(liks)

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