7. Non-proportional Substitution Patterns I: Generalized Extreme Value Models

The chapter begins by revisiting the multinomial logit model, highlighting its intuitive nature and analytical convenience. It then delves into the model's implicit assumption of the Independence of Irrelevant Alternatives, which leads to proportional substitution patterns. The author questions the realism of these patterns after the introduction of a new heating system, using a case study with five different heating options. The chapter proceeds to estimate a multinomial logit model, presenting the estimation results and discussing their implications. The analysis reveals the limitations of the model in capturing non-proportional substitution patterns, offering insights into the model's performance and the need for alternative approaches in discrete choice analysis.