Work

On path independent stochastic choice

Year: 2018

Type: article

Abstract: We investigate stochastic choice when only the average and not the entire distribution of choices is observable, focusing attention on the popular Luce model. Choice is path independent if it is recursive, in the sense that choosing from a menu can be broken up into choosing from smaller submenus. While an important property, path independence is known to be incompatible with continuous choice. The main result of our paper is that a natural modification of path independence, which we call partial path independence, is not only compatible with continuity, but ends up characterizing the ubiquitous Luce (or logit) rule.

Source: Theoretical Economics

DOI: 10.3982/te2653

Authors: David S. Ahn, Federico Echenique, Kota Saito

Institutions: University of California, Berkeley, California Institute of Technology

Language: English

Topic: Decision-Making and Behavioral Economics

Subfield: General Decision Sciences

Field: Decision Sciences

Domain: Social Sciences

Open Access status: diamond

Funder: National Science Foundation

Awards: Choices under Uncertainty, NeTS: Large: Networked Markets: Theory and Applications