Knowra Daniel McFadden Daniel McFadden Daniel McFadden is an American economist whose work developed discrete-choice analysis, methods for modeling decisions among alternatives. He received the 2000 Nobel Memorial Prize in Economic Sciences.
Discrete choice : A model of decisions in which a decision-maker selects one option from a finite set of alternatives. This is the class of choice problems McFadden made tractable for empirical analysis.
Logit model : A statistical model that represents probabilities using the logistic function. The conditional logit model expresses alternative-specific choice probabilities in this form.
BART : The San Francisco Bay Area’s rapid-transit system, opened in 1972. McFadden analyzed travel choices surrounding the system’s development and helped assess its likely demand.
Truman Bewley : An American economist known for research on general equilibrium, money, and incomplete markets. Bewley was McFadden’s doctoral adviser at the University of Minnesota.
Random utility model : A model in which people choose the option with the highest utility, while some utility components are unobserved. It supplies the probabilistic foundation for McFadden’s models of observed choices.
Independence of irrelevant alternatives : A property requiring the relative odds of two options to remain unchanged when other options are added or removed. This restriction follows from the basic logit structure and can misrepresent substitution between choices.
Travel demand modeling : The quantitative prediction of how people choose routes, modes, destinations, and travel times. Choice models estimate how travelers respond to service, cost, and travel-time differences.
Kenneth Arrow : An American economist whose work on social choice and general equilibrium reshaped modern economics. Arrow’s social-choice research formed part of the intellectual background to McFadden’s work.
Conditional logit model : A discrete-choice model in which option attributes determine choice probabilities through a logistic formula. McFadden developed this model to estimate how attributes shape choices across alternatives.
Nested logit model : A discrete-choice model that groups similar alternatives into nests, allowing correlated unobserved utilities within groups. It relaxes the basic logit model’s restrictive substitution pattern.
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