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Published in Walter R. Paczkowski, Deep Data Analytics for New Product Development, 2020
There is another property called the Independence of Irrelevant Alternatives (IIA). Consider a case of just two products. The IIA property states that only the features of these two products count for the choice probabilities while the features of other products do not. This could be a problem or a benefit. The issues are too complex to develop here, but see Paczkowski [2018] for an extensive discussion.
Single-period assortment and stock-level decisions for dual sales channels with capacity limits and uncertain demand
Published in International Journal of Production Research, 2020
Despite its advantages, there are two shortcomings of the MNL model that should be noted. One of these shortcomings stems from its Independence of Irrelevant Alternatives (IIA) property. To illustrate this property, consider two distinct consideration sets and , and two distinct products i and j. The MNL formula implies that Thus, the relative preferences of products i and j are independent of the composition of the consideration sets and . The IIA property would not hold in the case where the consideration set could be divided into subsets such that products within one subset are more similar to each other than across subsets.2
Railway station choice modelling: a review of methods and evidence
Published in Transport Reviews, 2018
The key assumptions that underlie the MNL model are that the unobserved components of utility of the alternatives are independent of each other and have an identical (Gumbel) distribution (IIGD). As a consequence, it exhibits the independence from irrelevant alternatives (IIA) property which means that the ratio of probabilities for any two alternatives, and therefore the odds of choosing one alternative over another, remain the same irrespective of other alternatives or their attributes (Train, 2009). This results in proportional substitution behaviour where, for example, the addition of a new alternative to a choice set will reduce the probabilities of all the existing alternatives by the same percentage. This is a key weakness of MNL models, as such behaviour is unlikely to be exhibited in reality, where new alternatives are more likely to abstract users from alternatives which are similar to them.
From Engineering School to Careers: An Examination of Occupational Intentions of Mechanical Engineering Students
Published in Engineering Management Journal, 2022
James N. Magarian, Warren P. Seering
The validity of mlogit models rests, in part, on characteristics of their dependent variables. Specifically, these models must uphold an independence of irrelevant alternatives (IIA) assumption, which requires that the outcome categories constituting the dependent variable be sufficiently independent from one another such that adding or removing outcome options does not affect the outcome odds among the options that remain (Long & Freese, 2006). Following our construction of the mlogit models in this study, we conducted Hausman tests in Stata v.15 to demonstrate that the IIA assumption was upheld.