Papers
Topics
Authors
Recent
Gemini 2.5 Flash
Gemini 2.5 Flash
173 tokens/sec
GPT-4o
7 tokens/sec
Gemini 2.5 Pro Pro
46 tokens/sec
o3 Pro
4 tokens/sec
GPT-4.1 Pro
38 tokens/sec
DeepSeek R1 via Azure Pro
28 tokens/sec
2000 character limit reached

Independence of Irrelevant Decisions in Stochastic Choice (2312.04827v3)

Published 8 Dec 2023 in econ.TH

Abstract: We investigate stochasticity in choice behavior across diverse decisions. Each decision is modeled as a menu of actions with associated outcomes, and a stochastic choice rule assigns probabilities to actions based on the outcome profile. We characterize rules whose predictions are not affected by whether or not additional, irrelevant decisions are included in the model. Our main result is that such rules form the parametric family of mixed-logit rules.

Definition Search Book Streamline Icon: https://streamlinehq.com
References (49)
  1. M. Agranov and P. Ortoleva. Stochastic choice and preferences for randomization. Journal of Political Economy, 125(1):40–68, 2017.
  2. M. Agranov and P. Ortoleva. Revealed preferences for randomization: An overview. In AEA Papers and Proceedings, volume 112, pages 426–430. American Economic Association 2014 Broadway, Suite 305, Nashville, TN 37203, 2022.
  3. Discrete choice theory of product differentiation. MIT press, 1992.
  4. Incentives in experiments: A theoretical analysis. Journal of Political Economy, 126(4):1472–1503, 2018.
  5. Individual preferences, monetary gambles, and stock market participation: A case for narrow framing. American economic review, 96(4):1069–1090, 2006.
  6. Probabilities of choices among very similar objects: An experiment to decide between two models. Behavioral science, 8(4):306–311, 1963.
  7. J. Besag. Spatial interaction and the statistical analysis of lattice systems. Journal of the Royal Statistical Society: Series B (Methodological), 36(2):192–225, 1974.
  8. H. D. Block and J. Marschak. Random orderings and stochastic theories of response. 1959.
  9. M. K. Camara. Computationally tractable choice. In Proceedings of the 23rd ACM Conference on Economics and Computation, pages 28–28, 2022.
  10. Deliberately stochastic. American Economic Review, 109(7):2425–2445, 2019.
  11. A canon of probabilistic rationality. Journal of Economic Theory, 196:105289, 2021a.
  12. Axiomatic tests for the boltzmann distribution. Journal of Statistical Mechanics: Theory and Experiment, 2021(1):013406, 2021b.
  13. Multinomial Logit Processes and Preference Discovery: Inside and Outside the Black Box. The Review of Economic Studies, 08 2022. ISSN 0034-6527. doi: 10.1093/restud/rdac046. URL https://doi.org/10.1093/restud/rdac046. rdac046.
  14. E. Chamberlin and J. Wolfe. Multiplicative homomorphisms of matrices. Proceedings of the American Mathematical Society, 4(1):37–42, 1953.
  15. Correlated choice. arXiv preprint arXiv:2103.05084, 2021.
  16. G. Debreu. Review of individual choice behavior by RD Luce. American Economic Review, 50(1):186–188, 1960.
  17. The perception-adjusted luce model. Mathematical Social Sciences, 93:67–76, 2018.
  18. J.-C. Falmagne. A representation theorem for finite random scale systems. Journal of Mathematical Psychology, 18(1):52–72, 1978.
  19. The Feynman lectures on physics, Vol. I: The new millennium edition: mainly mechanics, radiation, and heat, volume 1. Basic books, 2011.
  20. G. B. Folland. Real analysis: modern techniques and their applications, volume 40. John Wiley & Sons, 1999.
  21. Dynamic random utility. Econometrica, 87(6):1941–2002, 2019.
  22. D. Fudenberg and T. Strzalecki. Dynamic logit with choice aversion. Econometrica, 83(2):651–691, 2015.
  23. Random choice as behavioral optimization. Econometrica, 82(5):1873–1912, 2014.
  24. D. H. Hyers. On the stability of the linear functional equation. Proceedings of the National Academy of Sciences, 27(4):222–224, 1941.
  25. Approximate homomorphisms. Aequationes mathematicae, 44(2-3):125–153, 1992.
  26. S.-M. Jung. Hyers-Ulam-Rassias stability of functional equations in nonlinear analysis, volume 48. Springer Science & Business Media, 2011.
  27. Dynamic and stochastic rational behavior. arXiv preprint arXiv:2302.04417, 2023.
  28. M. Kuczma. An introduction to the theory of functional equations and inequalities. (No Title), 2009.
  29. Statistical Physics: Volume 5, volume 5. Elsevier, 1951.
  30. R. Li. Dynamic random choice. arXiv preprint arXiv:2102.00143, 2021.
  31. R. D. Luce. Individual Choice Behavior: A theoretical analysis. John Wiley and Sons, Inc, 1959.
  32. R. D. Luce and P. Suppes. Preferences, utility and subjective probability. Handbook of mathematical psychology, pages 249–410, 1965.
  33. M. J. Machina. Stochastic choice functions generated from deterministic preferences over lotteries. The economic journal, 95(379):575–594, 1985.
  34. F. Matějka and A. McKay. Rational inattention to discrete choices: A new foundation for the multinomial logit model. American Economic Review, 105(1):272–298, 2015.
  35. L. Mattner. Cumulants are universal homomorphisms into hausdorff groups. Probability theory and related fields, 130:151–166, 2004.
  36. Probabilistic choice and procedurally bounded rationality. Games and Economic Behavior, 41(1):61–78, 2002.
  37. D. McFadden. Conditional logit analysis of qualitative choice behavior. Frontiers in Econometrics, pages 105–142, 1974.
  38. D. McFadden. Economic choices. American economic review, 91(3):351–378, 2001.
  39. D. McFadden and M. K. Richter. Stochastic rationality and revealed stochastic preference. Preferences, Uncertainty, and Optimality, Essays in Honor of Leo Hurwicz, Westview Press: Boulder, CO, pages 161–186, 1990.
  40. An application of diagnostic tests for the independence from irrelevant alternatives property of the multinomial logit model. Institute of Transportation Studies, University of California Berkeley, 1977.
  41. Quantal response equilibria for normal form games. Games and economic behavior, 10(1):6–38, 1995.
  42. K. Saito. Axiomatizations of the mixed logit model. 2018.
  43. C. E. Shannon. A mathematical theory of communication. The Bell system technical journal, 27(3):379–423, 1948.
  44. C. E. Shannon. Coding theorems for a discrete source with a fidelity criterion. IRE Nat. Conv. Rec, 4(142-163):1, 1959.
  45. C. A. Sims. Implications of rational inattention. Journal of monetary Economics, 50(3):665–690, 2003.
  46. Rational inattention dynamics: Inertia and delay in decision-making. Econometrica, 85(2):521–553, 2017.
  47. K. E. Train. Discrete choice methods with simulation. Cambridge university press, 2009.
  48. R. Webb. The (neural) dynamics of stochastic choice. Management Science, 65(1):230–255, 2019.
  49. M. Woodford. Stochastic choice: An optimizing neuroeconomic model. American Economic Review, 104(5):495–500, 2014.
Citations (2)
View on Semantic Scholar

Summary

We haven't generated a summary for this paper yet.

Ai Sparkles Streamline Icon: https://streamlinehq.com Summarize Now