Consumer Preference Axioms: Behavioral Postulates for Describing and Predicting Stochastic Choice
AbstractThis paper draws on econometrics, von Neumann-Morgenstern utility theory, stochastic choice theory, and consumer behavior to develop five basic axioms or postulates of stochastic choice behavior. These axioms imply the existence and uniqueness of a preference function which identifies how consumers evaluate products in terms of product attributes. The preference function produces a scalar goodness measure for each product in a consumer's choice set. These goodness measures then predict choice probabilities for each product in a consumer's choice set. The advantage of these axioms is that they extend the strengths of von Neumann-Morgenstern theory to stochastic choice and make possible the determination of consistent choice probabilities.
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Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 24 (1978)
Issue (Month): 13 (September)
marketing: buyer behavior; utility/preference: theory; decision analysis;
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- Manrai, Ajay K., 1995. "Mathematical models of brand choice behavior," European Journal of Operational Research, Elsevier, vol. 82(1), pages 1-17, April.
- John R. Hauser & Steven Shugan, 1978. "Intensity Measures of Consumer Preferences," Discussion Papers 291, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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