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Revealed Stochastic Preference: A one-paragraph proof and generalization

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  • Stoye, Jörg

Abstract

McFadden and Richter (1991) and later McFadden (2005) show that the Axiom of Revealed Stochastic Preference characterizes rationalizability of choice probabilities through random utility models on finite universal choice spaces. This note proves the result in one short, elementary paragraph and extends it to set valued choice. The latter requires a different axiom than is reported in McFadden (2005).

Suggested Citation

  • Stoye, Jörg, 2019. "Revealed Stochastic Preference: A one-paragraph proof and generalization," Economics Letters, Elsevier, vol. 177(C), pages 66-68.
    • Handle: RePEc:eee:ecolet:v:177:y:2019:i:c:p:66-68
    DOI: 10.1016/j.econlet.2018.12.023
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    References listed on IDEAS

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    1. Yuichi Kitamura & Jörg Stoye, 2018. "Nonparametric Analysis of Random Utility Models," Econometrica, Econometric Society, vol. 86(6), pages 1883-1909, November.
    2. Rahul Deb & Yuichi Kitamura & John K H Quah & Jörg Stoye, 2023. "Revealed Price Preference: Theory and Empirical Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 707-743.
    3. Faruk Gul & Wolfgang Pesendorfer, 2006. "Random Expected Utility," Econometrica, Econometric Society, vol. 74(1), pages 121-146, January.
    4. Fishburn, Peter C., 1992. "Induced binary probabilities and the linear ordering polytope: a status report," Mathematical Social Sciences, Elsevier, vol. 23(1), pages 67-80, February.
    5. Stefan Hoderlein & Jörg Stoye, 2015. "Testing stochastic rationality and predicting stochastic demand: the case of two goods," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(2), pages 313-328, October.
    6. Daniel McFadden, 2005. "Revealed stochastic preference: a synthesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(2), pages 245-264, August.
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    Cited by:

    1. Yuichi Kitamura & Jorg Stoye, 2019. "Nonparametric Counterfactuals in Random Utility Models," Papers 1902.08350, arXiv.org, revised May 2019.
    2. Christopher Turansick, 2023. "On Graphical Methods in Stochastic Choice," Papers 2303.14249, arXiv.org, revised Sep 2023.
    3. Mark Dean & Dilip Ravindran & Jorg Stoye, 2022. "A Better Test of Choice Overload," Papers 2212.03931, arXiv.org.
    4. Daniele Caliari & Henrik Petri, 2024. "Irrational Random Utility Models," Papers 2403.10208, arXiv.org.

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    More about this item

    Keywords

    Revealed Stochastic Preference; Random Utility;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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