Investigating the competitive assumptions of multinomial logit models for brand choice by nonparametric modelling (Q1775990)

The goal of this paper is to investigate explicitly whether the multinomial logit model (MNL) structure of inter-brand competition is a reasonable assumption so that its nonparametric relaxation is not warranted when the utility function is estimated nonparametrically. For this purpose, the authors compare the performance of two comparable nonparametric choice models that differ in one aspect: one assumes an MNL competitive structure and the other infers the pattern of brands' competition nonparametrically from the data. Results of a simulation study are presented and application of both models to German scanner panel data of brand choice in a health care product category are discussed.