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Hallo all, I am new to the list an not an econometrician (double apologies!). I have a problem with the test for the Independence of Irrelevant Alternatives (IIA) in a Multinomial Logit Model (MNL). I am using the Hausmann McFadden test . The test statistic is: (b_r - b_u)' [VC_r - VC_u]^(-1) (b_r - b_u) where b_u estimated parameters of the full choice set VC_r estimated variance and covariance matrix of the full choice set b_r estimated parameters of the restricted choice set VC_r estimated variance and covariance matrix of the restricted choice set Although quadratic, the statistic is sometimes negative (because the restricted model has less observations than the unrestricted). Hausmann and McFadden (Econometrica, 1984, p.1226), suggest an asymptotically equivalent estimate of VC_r for a conditional logit model that guarantees positive semidefiniteness of [VC_r - VC_u]. Algebraically the conditional and multinomial logit models are the same, so I guess I could use the same logic to obtain an alternative estimate to obtain a poitive test statistic. Do you know where I could find a specification I could use for the MNL? Has anybody encountered the same problem before? I will be happy to make a summary for the list of the replies I receive. Thank you very much for your help Alberto Bacchiega University of York (UK) %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%