Discrete Choice Models

Seminar paper from the year 2007 in the subject Mathematics - Statistics, grade: sehr gut (6.0), University of Fribourg (Departement fur Mathematik), course: Freies Seminar des Departements fur Mathematik, language: English, abstract: There are many settings in which the outcome we seek to model is a discrete choice among a set of alternatives. Almost non of these models can be consistently estimated with linear regression methods. Other methods have been devised for these cases such as the logistic regression model. This paper presents some basic principles of the logistic regression model and explains its estimation using the maximum likelihood method. An econometric application at the end highlights the importance of the theoretical issues discussed.