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Stochastic choice over menus

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  • Pedram Heydari

    (Geisinger ADMI)

Abstract

Models of choice over menus aim at capturing the effect of some behavioral or non-standard element of decision-making on the behavior of a single decision-maker. These models are usually compared with the standard model of choice over menus, in which the decision-maker chooses a menu whose best item is better than that of all other available ones. However, in many empirical settings such as experimental studies, choice data come from a population of decision-makers with possibly heterogeneous attitudes and tastes. This heterogeneity can make the observed choices over menus stochastic. This fact calls for a stochastic characterization of models of choice over menus to be able to better compare and contrast different models empirically. In this paper, I do this task for the standard model, which would be an extension of the random utility model to the realm of choice over menus. In particular, I provide the necessary and sufficient conditions, i.e., axioms on (stochastic) choice data over menus for it to be consistent with a population of decision-makers each of whom behaves according to the standard model. The axioms that characterize the model are the axiom of revealed stochastic preferences over singletons and three rationality axioms.

Suggested Citation

  • Pedram Heydari, 2020. "Stochastic choice over menus," Theory and Decision, Springer, vol. 88(2), pages 257-268, March.
    • Handle: RePEc:kap:theord:v:88:y:2020:i:2:d:10.1007_s11238-019-09723-6
    DOI: 10.1007/s11238-019-09723-6
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    References listed on IDEAS

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    Cited by:

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