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Threshold Luce Rules

Author

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  • Sean HORAN

Abstract

In the late 1950’s, Luce proposed two different theories of imperfect utility discrimination that have had a lasting impact on economics. One model (1956) gave rise to the literature on just noticeable differences while the other (1959) laid the foundations for the literature on discrete choice. In this paper, I present a unified model of imperfect utility discrimination that generalizes Luce’s two models; and addresses the main limitations of each. Surprisingly, choice behavior consistent with this model is characterized by two conditions from Luce’s monograph (1959).

Suggested Citation

  • Sean HORAN, 2018. "Threshold Luce Rules," Cahiers de recherche 24-2018, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    • Handle: RePEc:mtl:montec:24-2018
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    Cited by:

    1. Jose Apesteguia & Miguel A Ballester, 2021. "Separating Predicted Randomness from Residual Behavior," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 1041-1076.
    2. Dutta, Rohan, 2020. "Gradual pairwise comparison and stochastic choice," Theoretical Economics, Econometric Society, vol. 15(4), November.

    More about this item

    Keywords

    just noticeable difference; semi-order; Luce Choice axiom; strict utility model; imperfect utility discrimination;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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