Appendix F
Multinomial Logit Model
(Sources: Greene [1] and Borooah [2])
The unordered-choice model can be motivated by a random utility model. For the 
th customer faced with 
choices, suppose that the utility of choice 
is
(F.1) 
If the consumer makes choice 
, then we assume that 
is the maximum among the 
utilities. Hence, the statistical model is driven by the probability that choice 
is made, which is
(F.2) 
McFadden [3] has shown that if and only if the 
disturbances are independent and identically ...
