Date of this Version

10-1-1990

Document Type

Discussion Paper

Publication Details

Lester W. Johnson (1990) A Multinomial Probit Conjoint Simulator

School of Business Discussion Paper ; No. 9, Oct. 1990

© Copyright Lester W. Johnson and the School of Business, Bond University

Abstract

Probabilistic conjoint choice simulators based on Luce's choice axiom (BTL or Multinomial Logit simulators) suffer from the Independence from Irrelevant Alternatives (IIA) property. This is not very realistic in many real situations where some products are more similar to one of the alternatives than to others. A Multinomial Probit (MNP) choice simulator is proposed which allows for correlated alternatives to exist in a simulated market. The MNP simulator is illustrated with an empirical example and contrasted with results from a logit simulator.

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