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how does the log-linear specification work in MBC?

I hope this is an easy one:
I have a price variable with 5 levels and specified it as log-linear after assessing count analysis and part-worth results. The design matrix translates my 1, 2, 3, 4, 5 into -0.612, -0.14, 0.101, 0.264, 0.388.
I noticed that the transformed values are zero-centered and have a span of 1 by default. Now my questions are as follows:
1. how did we get to the transformed values from 1, 2, 3, 4, 5.
2. what do I have to pay attention if I were to use estimated parameters for calculations of shares of preferences outside of MBC? Do I have to transform the input variable beforehand?

asked Oct 31, 2012 by alex.wendland Bronze (2,080 points)
retagged Aug 8, 2017 by Walter Williams

1 Answer

+1 vote
Best answer
Please see pages 127-128 of the PDF documentation on MBC, which explains the transformation of prices from original prices to zero-centered log prices:


If you plan to use the estimated parameters from MBC within your own outside simulation tool, you'll need to transform the prices to the zero-centered log prices before multiplying by the coefficient.  (Assuming you've employed loglinear coding within MBC of course).
answered Oct 31, 2012 by Bryan Orme Platinum Sawtooth Software, Inc. (153,180 points)
selected Nov 13, 2017 by alex.wendland
Thanks Bryan, I found what you are referring to in appendix of the manual (13.6). Sorry for not looking thoroughly the first time... (-_- )*
Should the same preparation be used when estimating log-linear effects in CBC-HB and Latent Class?
yes, it should