Nonparametric mixed logit model with market-level parameters estimated from market share data

Abstract

We propose a nonparametric mixed logit model that is estimated using market-level choice share data. The model treats each market as an agent and represents taste heterogeneity through market-specific parameters by solving a multiagent inverse utility maximization problem, addressing the limitations of existing market-level choice models with parametric estimation. A simulation study is conducted to evaluate the performance of our model in terms of estimation time, estimation accuracy, and out-of-sample predictive accuracy. In a real data application, we estimate the travel mode choice of 53.55 million trips made by 19.53 million residents in New York State. These trips are aggregated based on population segments and census block group-level origin-destination (OD) pairs, resulting in 120,740 markets. We benchmark our model against multinomial logit (MNL), nested logit (NL), inverse product differentiation logit (IPDL), and the BLP models. The results show that the proposed model improves the out-of-sample accuracy from 65.30% to 81.78%, with a computation time less than one-tenth of that taken to estimate the BLP model. The price elasticities and diversion ratios retrieved from our model and benchmark models exhibit similar substitution patterns. Moreover, the market-level parameters estimated by our model provide additional insights and facilitate their seamless integration into supply-side optimization models for transportation design. By measuring the compensating variation for the driving mode, we found that a $9 congestion toll would impact roughly 60 % of the total travelers. As an application of supply-demand integration, we showed that a 50% discount of transit fare could bring a maximum ridership increase of 9402 trips per day under a budget of $50,000 per day.