# Inquire if MNL is necessary when estimating NL model

64 views

### linlin zhang

Nov 30, 2022, 7:48:59 AM11/30/22
to Biogeme
Dear Michael,

I encounter the following situation when runing the nested logit (NL) model with nine choices and with over 1,200,000 sample.

1) When I directly estimate the NL model, the NL model result show that the nested structure I designed works through judging MU (namely MU_1 as below).
2) However, when I first estimate the MNL model, remove insignificant independent variables in the utility function of each Choice based on MNL model result, and then estimate the NL model, the NL model result show that the same nested structure does not work by judging MU (namely MU_2 as below).
Which NL model 1)2) do you think works?

MU_1   8.943783    1.377819     6.491262  8.512058e-11
MU_2   1.261063    0.226150     5.576219  2.458025e-08

Best, Linlin

### Bierlaire Michel

Nov 30, 2022, 9:24:50 AM11/30/22
to linlin...@gmail.com, Bierlaire Michel, Biogeme

On 30 Nov 2022, at 12:24, linlin zhang <linlin...@gmail.com> wrote:

Dear Michael,

I encounter the following situation when runing the nested logit (NL) model with nine choices and with over 1,200,000 sample.

1) When I directly estimate the NL model, the NL model result show that the nested structure I designed works through judging MU (namely MU_1 as below).
2) However, when I first estimate the MNL model, remove insignificant independent variables in the utility function of each Choice based on MNL model result,

This is not a good idea to remove variables, especially if you know that the best model is logit.

and then estimate the NL model, the NL model result show that the same nested structure does not work by judging MU (namely MU_2 as below).

Why do you say “it does not work”?

Which NL model 1)2) do you think works?

MU_1   8.943783    1.377819     6.491262  8.512058e-11
MU_2   1.261063    0.226150     5.576219  2.458025e-08

Best, Linlin

--
You received this message because you are subscribed to the Google Groups "Biogeme" group.
To unsubscribe from this group and stop receiving emails from it, send an email to biogeme+u...@googlegroups.com.

### linlin zhang

Dec 1, 2022, 7:15:11 AM12/1/22
to Biogeme
Dear Michael,

1. Then my question is--- how to judge if the Nested Structure I designed in NL model works or not? Through which indicators? I am quite confused.

2. If we consider the following two indicator can  a) MU value is larger than 1; b)(MU-1)/Stderr is larger than 1.96 in my case (with over 1,200,000 observations). Then (MU_2-1)/Stderr=(1.261063-1)/0.226150  is less than 1.96. So that's why I said that does not work.

Best, Linlin

### Bierlaire Michel

Dec 1, 2022, 9:06:56 AM12/1/22
to linlin...@gmail.com, Bierlaire Michel, Biogeme
On 1 Dec 2022, at 11:52, linlin zhang <linlin...@gmail.com> wrote:

Dear Michael,

1. Then my question is--- how to judge if the Nested Structure I designed in NL model works or not? Through which indicators? I am quite confused.

A likelihood ratio test would do.

2. If we consider the following two indicator can  a) MU value is larger than 1; b)(MU-1)/Stderr is larger than 1.96 in my case (with over 1,200,000 observations). Then (MU_2-1)/Stderr=(1.261063-1)/0.226150  is less than 1.96. So that's why I said that does not work.

It means that the first nest is meaningful, but not necessarily the second one. You may want to constrain MU_2 to 1.

Best, Linlin

On 30 Nov 2022, at 12:24, linlin zhang <linlin...@gmail.com> wrote:

Dear Michael,

I encounter the following situation when runing the nested logit (NL) model with nine choices and with over 1,200,000 sample.

1) When I directly estimate the NL model, the NL model result show that the nested structure I designed works through judging MU (namely MU_1 as below).
2) However, when I first estimate the MNL model, remove insignificant independent variables in the utility function of each Choice based on MNL model result,

This is not a good idea to remove variables, especially if you know that the best model is logit.

and then estimate the NL model, the NL model result show that the same nested structure does not work by judging MU (namely MU_2 as below).

Why do you say “it does not work”?

Which NL model 1)2) do you think works?

MU_1   8.943783    1.377819     6.491262  8.512058e-11
MU_2   1.261063    0.226150     5.576219  2.458025e-08

Best, Linlin

--
You received this message because you are subscribed to the Google Groups "Biogeme" group.
To unsubscribe from this group and stop receiving emails from it, send an email to biogeme+u...@googlegroups.com.

--
You received this message because you are subscribed to the Google Groups "Biogeme" group.
To unsubscribe from this group and stop receiving emails from it, send an email to biogeme+u...@googlegroups.com.

### linlin zhang

Dec 2, 2022, 12:35:40 PM12/2/22
to Biogeme
Dear Michael,