When design decisions are informed by consumer choice models, uncertainty in the choice model and its share predictions creates uncertainty for the designer. We take a first step in investigating the variation in and accuracy of market share predictions by characterizing fit and forecast accuracy of multinomial logit, mixed logit, and nested logit models over a variety of utility function speci...

We consider assortment optimization problems when customers choose according to the nested logit model and there is a capacity constraint limiting the total capacity consumption of all products offered in all nests. When each product consumes one unit of capacity, our capacity constraint limits the cardinality of the offered assortment. For the cardinality constrained case, we develop an effici...

We consider a retailer offering an assortment of differentiated substitutable products to price-sensitive customers. Prices are chosen to maximize profit, subject to inventory/capacity constraints, as well as more general constraints. The profit is not even a quasi-concave function of the prices under the basic multinomial logit (MNL) demand model. Linear constraints can induce a non-convex fea...

Less than a handful of papers have used data on individuals to examine people’s decisions about which school to attend. This paper develops a nested logit model of the determinants of choice of a graduate business school. Data are drawn from a new longitudinal survey of registrants for the Graduate Management Admission Test. One finding is that elasticity of school choice with respect to tuitio...

We consider the assortment optimization problem under the classical two-level nested logit model. We establish a necessary and sufficient condition for the optimal assortment, and use this optimality condition to develop a simple greedy algorithm that iteratively removes at most one product from each nest, until the optimality condition is satisfied. Our algorithm also exploits the beautiful “l...

We consider assortment optimization problems when customers choose according to the nested logit model and there is a capacity constraint limiting the total capacity consumption of all products offered in all nests. When each product consumes one unit of capacity, our capacity constraint limits the cardinality of the offered assortment. For the cardinality constrained case, we develop an effici...

This article assesses the unilateral effects on prices of a merger in the Portuguese mobile telephony market. We use aggregate quarterly data from 1999 to 2005 and a nested logit model to estimate the price elasticities of demand and the marginal costs of subscription of mobile telephony. Given these estimates, we simulate the effects of the merger. We find that the available mobile telephony s...

— Using a nested multinomial logit model, this study investigates the demand ‘‘reduction’’ and ‘‘diversion’’ effects of user fees in rural areas of Ethiopia. The results reveal that an increase in user fees of public clinics, which are the most widely used alternative, can have a significant demand reduction effect on the poorest of the poor. This implies that despite cost recovery has been adv...

This paper considers alternative means of rationing access to outdoor recreation areas, focussing on rock-climbing sites in Scotland. Such rationing is deemed increasingly important due to crowding and environmental externalities, yet cultural and practical considerations mean that a system of simple entry fees to mountain areas is unrealistic. We use a repeated nested multinomial logit model t...