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How to extend a model of probabilistic choice from binary choices to choices among more than two alternatives

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  • Blavatskyy, Pavlo R.

Abstract

This 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.

Suggested Citation

  • Blavatskyy, Pavlo R., 2009. "How to extend a model of probabilistic choice from binary choices to choices among more than two alternatives," Economics Letters, Elsevier, vol. 105(3), pages 330-332, December.
    • Handle: RePEc:eee:ecolet:v:105:y:2009:i:3:p:330-332
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    References listed on IDEAS

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    1. John D. Hey & Chris Orme, 2018. "Investigating Generalizations Of Expected Utility Theory Using Experimental Data," World Scientific Book Chapters, in: Experiments in Economics Decision Making and Markets, chapter 3, pages 63-98, World Scientific Publishing Co. Pte. Ltd..
    2. Huber, Joel & Puto, Christopher, 1983. "Market Boundaries and Product Choice: Illustrating Attraction and Substitution Effects," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 10(1), pages 31-44, June.
    3. Blavatskyy, Pavlo R., 2008. "Stochastic utility theorem," Journal of Mathematical Economics, Elsevier, vol. 44(11), pages 1049-1056, December.
    4. Huber, Joel & Payne, John W & Puto, Christopher, 1982. "Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(1), pages 90-98, June.
    5. Kaisa Herne, 1999. "The Effects of Decoy Gambles on Individual Choice," Experimental Economics, Springer;Economic Science Association, vol. 2(1), pages 31-40, August.
    6. Amos Tversky & Itamar Simonson, 1993. "Context-Dependent Preferences," Management Science, INFORMS, vol. 39(10), pages 1179-1189, October.
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    Cited by:

    1. Pavlo Blavatskyy, 2012. "Probabilistic choice and stochastic dominance," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(1), pages 59-83, May.
    2. Blavatskyy, Pavlo R., 2012. "Probabilistic subjective expected utility," Journal of Mathematical Economics, Elsevier, vol. 48(1), pages 47-50.
    3. Blavatskyy, Pavlo, 2018. "Fechner’s strong utility model for choice among n>2 alternatives: Risky lotteries, Savage acts, and intertemporal payoffs," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 75-82.
    4. Blavatskyy, Pavlo, 2019. "Future plans and errors," Mathematical Social Sciences, Elsevier, vol. 102(C), pages 85-92.
    5. Pavlo R. Blavatskyy, 2020. "Dual choice axiom and probabilistic choice," Journal of Risk and Uncertainty, Springer, vol. 61(1), pages 25-41, August.

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