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on Discrete Choice Models |
| By: | André de Palma (THEMA,University of Cergy-Pontoise); Moshe Ben-Akiva (Massachusetts Institute of Technology); David Brownstone (University of California at Irvine); Charles Holt (University of Virginia); Thierry Magnac (Toulouse School of Economics); Daniel McFadden (University of California, Berkeley); Peter Moffatt (University of East Anglia); Nathalie Picard (University of Cergy-Pontoise); Kenneth Train (University of California, Berkeley); Peter Wakker (Erasmus University); Joan Walker (Boston University) |
| Abstract: | This paper examines the cross-fertilizations of random utility models with the study of decision making under risk and uncertainty. We start with a description of the Expected Utility (EU) theory and then consider deviations from the standard EU frameworks, involving the Allais paradox and the Ellsberg paradox, inter alia. We then discuss how the resulting Non-EU framework can be modeled and estimated within the framework of discrete choices in static and dynamic contexts. Our objectives in addressing risk and ambiguity in individual choice contexts are to understand the decision choice process, and to use behavioral information for prediction, prescription and policy analysis. |
| Keywords: | discrete choice, decision making, risk, uncertainty, (cumulative) prospect theory, ambiguity |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2008-02&r=dcm |
| By: | Han Bleichrodt (Erasmus University of Rotterdam); Jose Luis Pinto-Prades (Centro de Estudios Andaluces) |
| Abstract: | A central assumption in health utility measurement is that preferences are invariant to the elicitation method that is used. This assumptioin is challenged by preferences reversals. Previous studies have observed prefrence resersals between choise and matching tasks and between choise and ranking tasks. We present a new preference reversal that entirely choise-based. Because choise is the basic primitive of economics and utility theory, this preference reversal is more fundamental and troubling. The preference reversal was observed in two studies regarding health states after stroke. Both studies involved large representative samples from the Spanish population, interwied professionally and face-to-face. Possible explanations for the preference reversal are the anticipation of disappointment and elation is risky choise anda the impact of ethical co0nsiderations about the value of live. |
| Keywords: | Health utility measurement, preference reversal, choice behavior |
| JEL: | D81 L10 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:cea:doctra:e2007_15&r=dcm |
| By: | Tasos Kalandrakis (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158) |
| Abstract: | We derive necessary and sufficient conditions in order for a finite number of binary voting choices to be consistent with the hypothesis that voters have preferences that admit concave utility representations. When the location of the voting alternatives is known, we apply these conditions in order to derive simple, nontrivial testable restrictions on the location of voters’ ideal points, and in order to predict individual voting behavior. If, on the other hand, the location of voting alternatives is unrestricted then voting decisions impose no testable restrictions on the joint location of voter ideal points, even if the space of alternatives is one dimensional. Furthermore, two dimensions are always sufficient to represent or fold the voting records of any number of voters while endowing all these voters with strictly concave preferences and arbitrary ideal points. The analysis readily generalizes to choice situations over any finite sets of alternatives. |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:roc:wallis:wp51&r=dcm |
| By: | T. DEMUYNCK |
| Abstract: | We introduce an Absolute (Relative) Time-consistent Axiom of Revealed Preference which characterizes the consistency of a choice function with the property of absolute (relative) time-consistency and impatience. The axiom requires that the absolute (relative) time-consistent and impatient closure of the revealed preference relation does not conflict with the strict revealed preference relation. |
| Keywords: | Time-consistency; Revealed Preference, Choice Function. |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:07/485&r=dcm |