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log-form linear combination of variables in utility function

Posted: 03 Dec 2020, 00:25
by capon
Hi!

I would like to ask a utility specification question when estimating a logit model. Lets assume I have three variables (Var1, Var2, Var3) where Var 2 and Var 3 belong to a similar group and I would like to create a linear combination of them when specifying in the utility and they will enter to the utility function in a logarithmic form. In specifics, it will look like that:

U=Beta1*Var1+ln(Beta2*Var2+Beta3*Var3)

Is it possible to easily define this specification in Apollo?

Note that this is different than log-transforming each variable since the sum operation is inside the logarithm.

Many thanks in advance!

Re: log-form linear combination of variables in utility function

Posted: 04 Dec 2020, 17:33
by stephanehess
Hi

there is nothing stopping you from writing this utility function out in Apollo exactly the way you have here. However, having the beta parameters inside the log can of course lead to problems if the sign changes

Stephane