A comparison of elasticities derived from multinomial logit, nested logit and heteroscedastic extreme value SP-RP discrete choice models

The literature on choice modeling offers limited evidence on the variations in elasticity as we move from an MNL model based on revealed preference (RP) data, to MNL based on stated preference (SP) data, to combined RP-SP data estimated with partial relaxation of the differential variance in the unobserved effects by the nested logit method, and then as free variance across all RP and SP alternatives by heteroscedastic extreme value (HEV) estimation. The evidence herein suggests that constraining the variance of the unobserved effects tends to over-estimate the elasticity sufficiently to distort the behavioral sensitivity of attributes influencing choice.