Nested Logit Model

A Nested Logit Model is a statistical tool used to understand how people make choices when options are grouped into categories or "nests." For example, if someone chooses a mode of transport, the choices might be grouped into public transport, private vehicles, or walking. The model considers that decisions within a category are more similar to each other than to options in different categories. This helps predict choices more accurately by capturing the similarities within groups, reflecting real-world decision-making processes where choices are related and structured hierarchically.