Discrete choice probability equation help (in pre-algebraic terms please)?

In summary, the equation for discrete choice probability involves P, which represents the probability of a person choosing a specific alternative, and is determined by the attributes of the alternatives, the characteristics of the person, and a set of parameters that relate variables to probabilities. The probability distribution function G, such as normal or logistic, is used to calculate this probability.
  • #1
moonman239
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As it says in the title, will anyone please give me the equation (in pre-algebraic terms) for discrete choice probability? I can see that the equation is P = Prob( Person n chooses Alternative i ) = G(xni, xnj(forall j inequal to i), sn, β),

where

xni is a vector of attributes of alternative i faced by person n,

"forall j inequal to i" is a vector of attributes of the other alternatives (other than i) faced by person n,

sn is a vector of characteristics of person n, and

β is a set of parameters that relate variables to probabilities, which are estimated statistically.

(I'm totally copying this off Wikipedia.) I'm baffled. What is G()?
 
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  • #2
G is a probability distribution function such as normal or logistic. See http://en.wikipedia.org/wiki/Discrete_choice#Consumer_Utility for an example from consumer utility. If [itex]\epsilon[/itex] is normally distributed, so is [itex]\epsilon_{nj}-\epsilon_{ni}[/itex] and therefore

[tex]P_{ni}=Prob\left\{\epsilon_{nj}-\epsilon_{ni} < \beta z_{ni}-\beta z_{nj}\right\} = G\left(\beta z_{ni}-\beta z_{nj}\right)[/tex]

where G is the normal c.d.f.
 

Related to Discrete choice probability equation help (in pre-algebraic terms please)?

1. What is a discrete choice probability equation?

A discrete choice probability equation is a mathematical formula used to calculate the likelihood of choosing a specific option among a set of discrete choices. It takes into account various factors such as the number of options, their respective probabilities, and the decision-maker's preferences.

2. How is a discrete choice probability equation different from a regular probability equation?

A discrete choice probability equation is specific to situations where there are a limited number of options to choose from, while a regular probability equation can be used for continuous variables. In addition, a discrete choice probability equation takes into account the decision-maker's preferences, whereas a regular probability equation only considers the probability of events occurring.

3. What is the importance of using a discrete choice probability equation?

Using a discrete choice probability equation allows for a more accurate prediction of decision-making behavior in situations where there are a limited number of options. It can also help identify the most preferred option among the choices available.

4. Can you provide an example of a discrete choice probability equation?

One example of a discrete choice probability equation is the multinomial logit model, which is commonly used in economics and marketing research. This equation calculates the probability of choosing a specific option out of a set of options, based on the decision-maker's preferences and the characteristics of the options.

5. How do I solve a discrete choice probability equation?

The process of solving a discrete choice probability equation involves identifying the relevant factors, such as the number of options, their probabilities, and the decision-maker's preferences. These factors are then plugged into the equation to calculate the probability of choosing a specific option. The equation can be solved using basic algebraic operations or with the help of statistical software.

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