Echenique, Federico and Saito, Kota (2015) General Luce Model. Social Science Working Paper, 1407. California Institute of Technology , Pasadena, California. https://resolver.caltech.edu/CaltechAUTHORS:20160323-155625592
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Abstract
We extend the Luce model of discrete choice theory to satisfactorily handle zero-probability choices. The Luce model (or the Logit model) is the most widely applied and used model in stochastic choice, but it struggles to explain choices that are never made. The Luce model requires that if an alternative y is never chosen when x is available, then there is no set of alternatives from which y is chosen with positive probability: y cannot be chose, if from sets of alternatives that exclude x. We relax this assumption. In our model, if an alternative y is never chosen when x is available, then we infer that y is dominated by x. While dominated by x, y may still be chosen with positive probability - even with high probability - when grouped with a comparable set of alternatives.
Item Type: | Report or Paper (Working Paper) | ||||||
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Additional Information: | November 2015. | ||||||
Group: | Social Science Working Papers | ||||||
Subject Keywords: | Stochastic Choice, Logit Model, Luce Model, Independence of Irrelevant Alternatives, Dominance | ||||||
Series Name: | Social Science Working Paper | ||||||
Issue or Number: | 1407 | ||||||
Classification Code: | JEL D01,D10 | ||||||
Record Number: | CaltechAUTHORS:20160323-155625592 | ||||||
Persistent URL: | https://resolver.caltech.edu/CaltechAUTHORS:20160323-155625592 | ||||||
Usage Policy: | No commercial reproduction, distribution, display or performance rights in this work are provided. | ||||||
ID Code: | 65636 | ||||||
Collection: | CaltechAUTHORS | ||||||
Deposited By: | Katherine Johnson | ||||||
Deposited On: | 23 Mar 2016 22:57 | ||||||
Last Modified: | 03 Mar 2020 13:01 |
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