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Efficiency Gains in Rank‐ordered Multinomial Logit Models

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Oxford Bulletin of Economics and Statistics

Published online on

Abstract

This paper considers estimation of discrete choice models when agents report their ranking of the alternatives (or some of them) rather than just the utility maximizing alternative. We investigate the parametric conditional rank‐ordered Logit model. We show that conditions for identification do not change even if we observe ranking. Moreover, we fill a gap in the literature and show analytically and by Monte Carlo simulations that efficiency increases as we use additional information on the ranking.