The Application of Discrete Choice Models In Marketing Decisions

Abstract

The paper is devoted to the analysis of logit models and their application in the market. A theoretical basis for logit models is determined. Equations for logit probabilities are derived and methods are applied in order to analyze real market situations. The real data set is analyzed to estimate 2 logit models, as well as a probit model. Obtained results are compared with experimentally calculated logit probabilities.

Keywords: Decisions; discrete choice model; logit and probit models; simulation; statistical modeling