Logit mixture with inter and intra-consumer heterogeneity and flexible mixing distributions

Mazen Danaf*, Bilge Atasoy, Moshe Ben-Akiva

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

3 Citations (Scopus)
12 Downloads (Pure)

Abstract

Logit mixture models have gained increasing interest among researchers and practitioners because of their ability to capture unobserved taste heterogeneity. Becker et al. (2018) proposed a Hierarchical Bayes (HB) estimator for logit mixtures with inter- and intra-consumer heterogeneity (defined as taste variations among different individuals and among different choices made by the same individual respectively). However, the underlying model relies on strong assumptions on the inter- and intra-consumer mixing distributions; these distributions are assumed to be normal (or log-normal), and the intra-consumer covariance matrix is assumed to be the same for all individuals. This paper presents a latent class extension to the model and the estimator proposed by Becker et al. (2018) to account for flexible, semi-parametric mixing distributions. This relaxes the normality assumptions and allows different individuals to have different intra-consumer covariance matrices. The proposed model and the HB estimator are validated using real and synthetic data sets, and the models are evaluated using goodness-of-fit statistics and out-of-sample validation. Our results show that when the data comes from two or more distinct classes (with different population means and inter- and intra-consumer covariance matrices), this model results in a better fit and predictions compared to the single class model.

Original languageEnglish
Article number100188
Number of pages15
JournalJournal of Choice Modelling
Volume35 (2020)
DOIs
Publication statusPublished - 2019

Bibliographical note

Green Open Access added to TU Delft Institutional Repository 'You share, we take care!' - Taverne project https://www.openaccess.nl/en/you-share-we-take-care
Otherwise as indicated in the copyright section: the publisher is the copyright holder of this work and the author uses the Dutch legislation to make this work public.

Keywords

  • Bayesian estimation
  • Flexible mixing distributions
  • Intra-consumer heterogeneity
  • Latent class.
  • Logit mixture

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