3. A BRIEF DISCUSSlON OF THE CURRENT STATE-OF-THE-ART MODELS
Most of the modeling methodologies used to model consumer multiple-choice problems have
been based on the concept of the utility maximization principle [7,9]. A model that is gathering
considerable momentum in the applied field is the multinomial logit (MNL) model. The fundamental
structure behind logit analysis is a mathematical function that converts the preference values into
choice probabilities based on the theory of consumer behavior [20]. To briefly discuss this state-
of-the-art model (e.g. logit) we introduce the following notations.
Denote the utility of the jth alternative by U,. In the theoretical development of the concept of
utility maximization, utility is expressed as the sum of a deterministic component, 5, and a random
component, ej:
Uj= P)+ej.