Random choice as behavioral optimization

Research output: Contribution to journalArticle

30 Scopus citations

Abstract

We develop an extension of Luce's random choice model to study violations of the weak axiom of revealed preference. We introduce the notion of a stochastic preference and show that it implies the Luce model. Then, to address well-known difficulties of the Luce model, we define the attribute rule and establish that the existence of a welldefined stochastic preference over attributes characterizes it. We prove that the set of attribute rules and random utility maximizers are essentially the same. Finally, we show that both the Luce and attribute rules have a unique consistent extension to dynamic problems.

Original languageEnglish (US)
Pages (from-to)1873-1912
Number of pages40
JournalEconometrica
Volume82
Issue number5
DOIs
StatePublished - 2014

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Keywords

  • Attribute rule
  • Dynamic random choice
  • Luce rule
  • Random utility

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