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Cumulative Discrete Choice

Author

Listed:
  • Itzhak Gilboa

    (TAU - Tel Aviv University)

  • Amit Pazgal

Abstract

We present a discrete choice model in which a consumer's impression of each alternative is based on her memory of past experience with this choice, and is stochastically updated whenever the alternative is chosen. The consumer remembers a cumulative utility index per alternative, and, when an alternative is chosen, the index is updated by the addition of a random variable, interpreted as instantaneous utility. We prove that the frequencies of choice converge, with probability 1, to limit frequencies, which can be computed from the model's parameters.

Suggested Citation

  • Itzhak Gilboa & Amit Pazgal, 2001. "Cumulative Discrete Choice," Post-Print hal-00752291, HAL.
    • Handle: RePEc:hal:journl:hal-00752291
    DOI: 10.1023/A:1011134718403
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    Citations

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    Cited by:

    1. Noah Gans & George Knox & Rachel Croson, 2007. "Simple Models of Discrete Choice and Their Performance in Bandit Experiments," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 383-408, December.
    2. Maltz, Amnon, 2016. "Experience based dynamic choice: A revealed preference approach," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 1-13.
    3. Guerdjikova, Ani, 2006. "Portfolio Choice and Asset Prices in an Economy Populated by Case-Based Decision Makers," Working Papers 06-13, Cornell University, Center for Analytic Economics.
    4. Guerdjikova, Ani, 2008. "Case-based learning with different similarity functions," Games and Economic Behavior, Elsevier, vol. 63(1), pages 107-132, May.
    5. Noah Gans, 2002. "Customer Loyalty and Supplier Quality Competition," Management Science, INFORMS, vol. 48(2), pages 207-221, February.
    6. Balbontin, Camila & Hensher, David A. & Collins, Andrew T., 2019. "How to better represent preferences in choice models: The contributions to preference heterogeneity attributable to the presence of process heterogeneity," Transportation Research Part B: Methodological, Elsevier, vol. 122(C), pages 218-248.

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    Keywords

    cumulative discrete choice;

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