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Stochastic Representative Agent

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  • Jose Apesteguia
  • Miguel Ángel Ballester

Abstract

Consider the aggregation of a collection of individual stochastic behaviors that fit a given stochastic choice model. We say that such a model has a representative agent if their aggregate stochastic behaviour also fits the model. We show that the Luce model and several prominent extensions thereof do not have a representative agent. On the positive side, we show that the random utility model and several domain-specific restrictions thereof do have a representative agent.

Suggested Citation

  • Jose Apesteguia & Miguel Ángel Ballester, 2016. "Stochastic Representative Agent," Working Papers 928, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:928
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    References listed on IDEAS

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    1. Jose Apesteguia & Miguel A. Ballester & Jay Lu, 2017. "Single‐Crossing Random Utility Models," Econometrica, Econometric Society, vol. 85, pages 661-674, March.
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    7. Drew Fudenberg & Tomasz Strzalecki, 2015. "Dynamic Logit With Choice Aversion," Econometrica, Econometric Society, vol. 83, pages 651-691, March.
    8. Golman, Russell, 2012. "Homogeneity bias in models of discrete choice with bounded rationality," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 1-11.
    9. Drew Fudenberg & Ryota Iijima & Tomasz Strzalecki, 2015. "Stochastic Choice and Revealed Perturbed Utility," Econometrica, Econometric Society, vol. 83, pages 2371-2409, November.
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    14. 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.
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    Cited by:

    1. Yariv, Leeat & Jackson, Matthew O., 2018. "The Non-Existence of Representative Agents," CEPR Discussion Papers 13397, C.E.P.R. Discussion Papers.
    2. Victor H. Aguiar & Maria Jose Boccardi & Nail Kashaev & Jeongbin Kim, 2023. "Random utility and limited consideration," Quantitative Economics, Econometric Society, vol. 14(1), pages 71-116, January.

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    More about this item

    Keywords

    representative agent; stochastic choice.;

    JEL classification:

    • D0 - Microeconomics - - General
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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