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A representative consumer theorem for discrete choice models in networked markets

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  • Melo, Emerson

Abstract

We provide an alternative way to model sequential decision processes, which is consistent with the random utility maximization hypothesis and the existence of a representative agent. Our result is stated on terms of a direct utility representation, and it does not depend on parametric assumptions.

Suggested Citation

  • Melo, Emerson, 2012. "A representative consumer theorem for discrete choice models in networked markets," Economics Letters, Elsevier, vol. 117(3), pages 862-865.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:862-865
    DOI: 10.1016/j.econlet.2012.09.006
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    References listed on IDEAS

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    1. Ruud H. Koning & Geert Ridder, 2003. "Discrete choice and stochastic utility maximization," Econometrics Journal, Royal Economic Society, vol. 6(1), pages 1-27, June.
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    3. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    4. Herriges, Joseph A. & Kling, Catherine L., 1996. "Testing the consistency of nested logit models with utility maximization," Economics Letters, Elsevier, vol. 50(1), pages 33-39, January.
    5. Borsch-Supan, Axel, 1990. "On the compatibility of nested logit models with utility maximization," Journal of Econometrics, Elsevier, vol. 43(3), pages 373-388, March.
    6. Daly, Andrew & Bierlaire, Michel, 2006. "A general and operational representation of Generalised Extreme Value models," Transportation Research Part B: Methodological, Elsevier, vol. 40(4), pages 285-305, May.
    7. Anderson, Simon Peter & de Palma, Andre & Thisse, Jacques-Francois, 1988. "A Representative Consumer Theory of the Logit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(3), pages 461-466, August.
    8. Simon P. Anderson & André De Palma, 2006. "Market Performance With Multiproduct Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 54(1), pages 95-124, March.
    9. Verboven, Frank, 1996. "The nested logit model and representative consumer theory," Economics Letters, Elsevier, vol. 50(1), pages 57-63, January.
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    Citations

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    Cited by:

    1. Mogens Fosgerau & André de Palma, 2016. "Generalized entropy models," Working Papers hal-01291347, HAL.
    2. Fosgerau, Mogens & Frejinger, Emma & Karlstrom, Anders, 2013. "A link based network route choice model with unrestricted choice set," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 70-80.
    3. Mai, Tien & Bui, The Viet & Nguyen, Quoc Phong & Le, Tho V., 2023. "Estimation of recursive route choice models with incomplete trip observations," Transportation Research Part B: Methodological, Elsevier, vol. 173(C), pages 313-331.
    4. Jorge Lorca & Emerson Melo, 2020. "Choice Aversion in Directed Networks," Working Papers Central Bank of Chile 879, Central Bank of Chile.

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    More about this item

    Keywords

    Discrete choice models; Networked markets; Dynamic programming;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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