Lower-order logsums

André de Palma (1) , Karim Kilani (2)

1 ENS Cachan - École normale supérieure - Cachan
2 LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action

The logsum formula, which provides the expected maximum utility for the multinomial logit model, is often used as a measure of welfare. We provide here a closed form formula of the welfare measure of an individual who has not access to his first-best choice, but has access to his rth-best choice, r = 2, ...n, where n is the number of alternatives. The derivation is based on a standard identity in order statistics.

Mots clés: Discrete choice models; Gumbel distribution; Logit; Logsum; Order statistics

Domaines: Economies et finances

André de Palma, Karim Kilani. Lower-order logsums. 2012. ⟨hal-00690299⟩