Question: Consider a nested logit model with K = 3 nests. Let the dissimilarity parameter 1 = Y2 = Y3 = 1/2 and vo= 1.
Consider a nested logit model with K = 3 nests. Let the dissimilarity parameter 1 = Y2 = Y3 = 1/2 and vo= 1. Each nest has 5 items with the prices, pjk and attraction parameters Vjk for product j in nest k given below. Note products in different nests are disjoint. Nest 1: P11 = = 8, p21 = 4, P31 = 2, P41 = 7, P51 = 2 v11 = 0.6, V21 = 0.8, v31 = 0.1, v41 = 0.5, V51 = 0.9 Nest 2: P12 = 7, P22 = 4, P32 = 5, p42 = 6, P52 = 9 V12 = = 0.2, v22 = 0.8, V32 0.6, v42 = 0.2, V52 = 0.7 = Nest 3: = 8 = 0.1 P13 = 3, P23 = 10, P33 = 1, P43 = 5, P53 V13 = 0.8, V23 = 0.1, V33 = 1, V43 = 0.5, V53 Write a program to compute the optimal unconstrained assortment for the above nested logit model. You should write a binary search procedure to compute the optimal assortment and not just enumerate over all possible (approximately 30,000) choices. Activate Windows Go to Settings to activate Windows
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