ABSTRACT
This chapter summarizes the minimum knowledge necessary to understand discrete choice model analysis. Advanced mathematics may not be necessary to interpret the estimation results, and explanations are added to equations. Discrete choice is the selection of one alternative among a choice set, and choice set is the set of alternatives from which a decision-maker chooses. Therefore, discrete choice model represents analysis of which alternative to choose from the choice set based on specified levels of attributes that then become the characteristics of an alternative. Two kinds of data are usually used in discrete choice model analysis. Revealed preference data are based on revealed preferences observed from actual choices in markets. Stated preference data are derived from hypothetical experiments. The former is suited for explaining the current status or forecasting short-term transition, while the latter can deal with long-term changes of technology or utilities.
