A discrete choice model of travel mode to work includes two alternatives: driving alone (alternative 1) and taking transit (alternative 2) The model is based on the following utility functions: U1 = \phi 1 − t + \xi 1 U2 = \phi 2 - t^ + \xi 2 where \phi 1 and \phi 2 are model parameters. Both error terms \xi 1 and \xi 2 follow a uniform distribution between -b and b (a) Develop an analytical expression for P1 as a function of\ phi 1, \phi 2, t. t^, and b.. (b) Assume that \phi 1-\phi 2 = = 1 and plot P1 versus t^- t for several values of b. Discuss the effect of b on the choice probability and draw general conclusions.

A discrete choice model of travel mode to work includes two alternatives: driving alone (alternative 1) and taking transit (alternative 2) The model is based on the following utility functions: U1 = \phi 1 − t + \xi 1 U2 = \phi 2 - t^ + \xi 2 where \phi 1 and \phi 2 are model parameters. Both error terms \xi 1 and \xi 2 follow a uniform distribution between -b and b (a) Develop an analytical expression for P1 as a function of\ phi 1, \phi 2, t. t^, and b.. (b) Assume that \phi 1-\phi 2 = = 1 and plot P1 versus t^- t for several values of b. Discuss the effect of b on the choice probability and draw general conclusions.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 8E

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