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Random utility models with ordered types and domains

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  • Apesteguia, Jose
  • Ballester, Miguel A.

Abstract

Random utility models in which heterogeneity of preferences is modeled by means of an ordered collection of utilities, or types, provide a powerful framework for understanding a variety of economic behaviors. This paper studies the micro-foundations of ordered random utility models with the objective of meeting empirical requirements. This is done by working with arbitrary collections of ordered menus of alternatives, and by making no parametric assumptions about the type distribution. The model is characterized by a simple monotonicity axiom. Goodness-of-fit measures are proposed, with proof provided of the strong consistency of extremum estimators defined upon them. A statistical test for the model is also provided.

Suggested Citation

  • Apesteguia, Jose & Ballester, Miguel A., 2023. "Random utility models with ordered types and domains," Journal of Economic Theory, Elsevier, vol. 211(C).
    • Handle: RePEc:eee:jetheo:v:211:y:2023:i:c:s0022053123000704
    DOI: 10.1016/j.jet.2023.105674
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    More about this item

    Keywords

    Random utility model; Ordered utilities; Arbitrary domains;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • D00 - Microeconomics - - General - - - General

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