Lecture 1 Introduction

CIE 555: Discrete Choice Analysis

Instructor: Qian Wang

1 CIE 555 Discrete Choice Analysis 1/31/2017

 Outline
What is the discrete choice modeling
Why study it
Syllabus
Office hours
Text books
Course content
Grading policies
Academic integrity

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 What Are Discrete Choices
Choice examples
Breakfast options: muffin vs. bagel
Which route to choose
Weight you want to lose
Characteristics of discrete choices
Choices made by individuals
Choice responses: distinct/discrete; not continuous
Decision makers preferences and the choice
alternatives features often influence the final
decisions

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 Why to Model Discrete Choices
Purposes
Quantitatively assess why people make a choice
Commercial purposes
Predict demand and market share
Pricing
Know your enemy and defend

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 What Is Discrete Choice Analysis?
Definition:
A family of econometric/statistical techniques that
reveal the relationships between the probability
of choosing an choice alternative and the
features/benefits that characterize the alternative
as well as the individual who made the choice

An quantitative approach to deal with choice

situations

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 What Is Discrete Choice Analysis?
(Cont.)
Probabilistic methods that capture both the
commonality and randomness of choices

Commonality: common behavior exhibited by

individuals

Randomness: individuals who have the exactly

same attributes may make different choices

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 Applications
Examples

Transportation: activity choices, mode choices,

destination choices, route choices, choices of trip
purposes, and
Consumer demand
Business locations
Housing
Participation in the work force, occupation choice
Social studies

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 Why Study It?
A method significant to a variety of other
disciplines
Geographical studies
Housing
Business locations
Finance and business
Pricing
Competition behavior
Social studies
Emergency responses
Shelter locations

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 Why Study It? (Cont.)
In transportation engineering:
An important tool to understand travelers behavior
and travel decisions
The fundamental method of the activity-based travel
demand forecasting

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 Syllabus
Course outline
Prerequisites
Basic knowledge of probability and statistics
Understanding of simple regression analysis
Grading
Class project (one): 20% =15%
(report) + 5% (presentation)
Labs (three): 45% = 15%*3
Homework Assignments (four): 10% = 2.5%*4
Mid-term exam (one in class): 10%
Final exam (one): 15%
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 Class Project
Objective: produce a project report at the end of
the semester + presentation

Format: teamwork (<=2 team members at your

choice)

Subject
Case study at your choice
Open to any discipline

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 Class Project (Cont.)
Milestones of progress
Proposal and the first presentation

Preliminary results and peer review

Complete draft report and final presentation

Final report submission

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 Books
Required textbook:
Ben-Akiva, Moshe, and Steven R. Lerman. 2006.
Discrete choice analysis: theory and application to
travel demand. MIT Press series in transportation
studies, 9. Cambridge, Mass. [u.a.]: MIT Press.

Recommended book:
Train, Kenneth. 2003. Discrete choice methods with
simulation. New York: Cambridge University Press.
(Available at:
http://eml.berkeley.edu/books/choice2.html)

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 Office Hours
3:00PM-5:00PM on Wednesdays or by
appointments

Office: 231 Ketter Hall (North Campus)

Email: qw6@buffalo.edu

Phone: 716-645-4365

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 Next Lecture
Statistics of model estimation (Chapter 2)
Model estimation
Criteria for evaluating estimators
Sample properties
Methods of estimation
Statistical tests

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 References
Chapter 1 of the textbook
Handbook of Transportation Science
(http://books.google.com/books?hl=en&lr=&id=FxNwLniV2GEC&oi
=fnd&pg=PP11&dq=handbook+of+transportation+science&ots=a
tL4GXmjpS&sig=3PLe3GeaKDhTteik3feTTv-zVYc#PPP1,M1)
Handbook of Transport Modeling
(http://books.google.com/books?hl=en&lr=&id=tbbAS0GxcNUC&oi
=fnd&pg=PR5&dq=handbook+of+transport+modeling&ots=cHd-
zuQ8nj&sig=WOS5AMmaYP3oWImx5k6U9VVv9Po#PPP1,M1)

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