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Bill Nye, the Science Guy and a Cornell alum, is looking to buy an airline ticket from Ithaca to Seattle. There are two flight itineraries
Bill Nye, the Science Guy and a Cornell alum, is looking to buy an airline ticket from Ithaca to Seattle. There are two flight itineraries available with different prices and number of stops; these are the Xi values defined in the video Predictive Analytics for Customer-Level Forecasting Using a Multinomial Logit Choice Model: Choice-Theory Modeling for options i = 1, 2. He will either buy one of these two tickets or explore choices from a different airport (e.g., Syracuse). You will estimate his utility from these options. Ticket Options Options or Choices Price Number of Stops Option 1: Ithaca-Detroit-Seattle $800 1 Option 2: Ithaca-Newark-Chicago-Seattle $550 2 Suppose you have the following parameters of Mr. Nye's utility function available to calculate the expected utility of these choices: Parameters Options or Choices Intercept Slope of Price Slope of Number of Stops Options 1 and 2 4 -0.002 -0.2 Option 0: No Purchase (Do not buy either of these tickets from Ithaca and possibly explore options from other airports) 0 These parameters constitute the vector b defined in the lesson. The first parameter, Intercept, tells us that the intercept in Mr. Nye's utility from flying to Seattle from Ithaca is 4 as against a utility of 0 from choosing the No Purchase option. A negative value of the second parameter shows that his utility decreases as price increases. A negative value of the third parameter shows that his utility decreases as the number of stops on the route incre
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