Two Level Nested and Sequential Logit
Abstract
This technical note provides comprehensive derivations of fundamental equations in two-level nested and sequential logit models for analyzing hierarchical choice structures. We present derivations of the Berry (1994) inversion formula, nested inclusive values computation, and multi-level market share equations, complementing existing literature. While conceptually distinct, nested and sequential logit models share mathematical similarities and, under specific distributional assumptions, yield identical inversion formulas-offering valuable analytical insights. These notes serve as a practical reference for researchers implementing multi-level discrete choice models in empirical applications, particularly in industrial organization and demand estimation contexts, and complement Mansley et al. (2019).
Cite
@article{arxiv.2503.21808,
title = {Two Level Nested and Sequential Logit},
author = {Davide Luparello},
journal= {arXiv preprint arXiv:2503.21808},
year = {2025}
}