A Logit Model With Endogenous Explanatory Variables and Network Externalities

Author(s)
de Grange, Louis; González, Felipe; Troncoso, Rodrigo; Vargas Olguin, Ignacio Javier
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Abstract
A novel logit model is presented that explicitly includes endogeneity in explanatory variables whose values depend on individual choice decisions that involve network externalities or social interactions such as those impacting road congestion or public transport comfort and convenience. The proposed specification corrects for this particular type of endogeneity. The model is derived from a linearly constrained maximum entropy optimization problem that incorporates the network externalities or social interactions causing the endogeneity. It is validated through simulations and an application to a case of transport mode choice in a Chilean city using real data.
Date issued
2015-01
URI
http://hdl.handle.net/1721.1/103138
Department
Massachusetts Institute of Technology. Department of Civil and Environmental Engineering
Journal
Networks and Spatial Economics
Publisher
Springer US
Citation
de Grange, Louis et al. “A Logit Model With Endogenous Explanatory Variables and Network Externalities.” Networks and Spatial Economics 15.1 (2015): 89–116.
Version: Author's final manuscript
ISSN
1566-113X
1572-9427
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