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Discrete Choice Models with Multiple Unobserved Choice Characteristics

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  • Susan Athey
  • Guido Imbens

Abstract

Since the pioneering work by Daniel McFadden, utility-maximization-based multinomial response models have become important tools of empirical researchers. Various generalizations of these models have been developed to allow for unobserved heterogeneity in taste parameters and choice characteristics. Here we investigate how rich a specification of the unobserved components is needed to rationalize arbitrary choice patterns in settings with many individual decision makers, multiple markets, and large choice sets. We find that if one restricts the utility function to be monotone in the unobserved choice characteristics, then up to two unobserved choice characteristics may be needed to rationalize the choices. Copyright 2007 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.
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  • Susan Athey & Guido Imbens, 2006. "Discrete Choice Models with Multiple Unobserved Choice Characteristics," Levine's Bibliography 122247000000001040, UCLA Department of Economics.
  • Handle: RePEc:cla:levrem:122247000000001040
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    File URL: http://www.stanford.edu/~athey/atheyimbens_mcfadden.pdf
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    Cited by:

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    2. Haoge Chang & Yusuke Narita & Kota Saito, 2022. "Approximating Choice Data by Discrete Choice Models," Papers 2205.01882, arXiv.org, revised Dec 2023.
    3. Burda, Martin & Harding, Matthew & Hausman, Jerry, 2008. "A Bayesian mixed logit-probit model for multinomial choice," Journal of Econometrics, Elsevier, vol. 147(2), pages 232-246, December.
    4. Eric Gautier & Yuichi Kitamura, 2013. "Nonparametric Estimation in Random Coefficients Binary Choice Models," Econometrica, Econometric Society, vol. 81(2), pages 581-607, March.
    5. Steven T. Berry & Philip A. Haile, 2014. "Identification in Differentiated Products Markets Using Market Level Data," Econometrica, Econometric Society, vol. 82, pages 1749-1797, September.
    6. Steven T. Berry & Philip A. Haile, 2009. "Nonparametric Identification of Multinomial Choice Demand Models with Heterogeneous Consumers," NBER Working Papers 15276, National Bureau of Economic Research, Inc.
    7. Eriksen, Michael D. & Kniesner, Thomas J. & Rohlfs, Chris & Sullivan, Ryan, 2016. "Toward more general hedonic estimation: Clarifying the roles of alternative experimental designs with an application to a housing attribute," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 54-62.
    8. Okwelum, Edson, 2015. "Consumer Heterogeneity and Gasoline Price Response: Implications for Optimal Tax policy," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205897, Agricultural and Applied Economics Association.
    9. Robert Donnelly & Francisco J.R. Ruiz & David Blei & Susan Athey, 2021. "Counterfactual inference for consumer choice across many product categories," Quantitative Marketing and Economics (QME), Springer, vol. 19(3), pages 369-407, December.
    10. Steven Berry & Philip Haile, 2016. "Identification in Differentiated Products Markets," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 27-52, October.
    11. Jun, Sung Jae & Pinkse, Joris, 2020. "Counterfactual prediction in complete information games: Point prediction under partial identification," Journal of Econometrics, Elsevier, vol. 216(2), pages 394-429.
    12. Rohlfs, Chris & Sullivan, Ryan & Kniesner, Thomas J., 2013. "Hedonic Estimation under Very General Conditions Using Experimental and Quasi-Experimental Designs," IZA Discussion Papers 7554, Institute of Labor Economics (IZA).
    13. Ian M. McCarthy & Rusty Tchernis, 2010. "Search costs and Medicare plan choice," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1142-1165, October.
    14. Anindya Ghose & Panagiotis G. Ipeirotis & Beibei Li, 2012. "Designing Ranking Systems for Hotels on Travel Search Engines by Mining User-Generated and Crowdsourced Content," Marketing Science, INFORMS, vol. 31(3), pages 493-520, May.

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