Discrete choice
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In economics, discrete choice problems involve choices between two or more discrete alternatives, such as entering or not entering the labor market, or choosing between modes of transport. Such choices contrast with standard consumption models in which the quantity of each good consumed is assumed to be continuously variable. In the continuous case, calculus methods can be used to determine the theoretical optimum, and demand can be modelled using regression analysis.
Modelling discrete choice is commonly undertaken using logit and probit models. The theoretical basis for this analysis was developed by Daniel McFadden.
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