How to Extend a Model of Probabilistic Choice from Binary Choices to Choices among More Than Two Alternatives
AbstractThis note presents an algorithm that extends a binary choice model to choice among multiple alternatives. Both neoclassical microeconomic theory and Luce choice model are consistent with the proposed algorithm. The algorithm is compatible with several empirical findings (asymmetric dominance and attraction effects) that cannot be explained within standard models.
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Bibliographic InfoPaper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 426.
Date of creation: Sep 2009
Date of revision:
Probabilistic choice; binary choice; multiple alternatives;
Find related papers by JEL classification:
- C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-19 (All new papers)
- NEP-CBE-2009-09-19 (Cognitive & Behavioural Economics)
- NEP-DCM-2009-09-19 (Discrete Choice Models)
- NEP-UPT-2009-09-19 (Utility Models & Prospect Theory)
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- Blavatskyy, Pavlo R., 2012. "Probabilistic subjective expected utility," Journal of Mathematical Economics, Elsevier, vol. 48(1), pages 47-50.
- Pavlo Blavatskyy, 2012. "Probabilistic choice and stochastic dominance," Economic Theory, Springer, vol. 50(1), pages 59-83, May.
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