 Integrability and identification in multinomial choice modelsJournal of Economic Theory, 2025, vol. 223, issue C Abstract: McFadden's random-utility model of multinomial choice has long been the workhorse of applied research. We establish shape-restrictions with respect to price and income which are necessary and sufficient for multinomial choice-probability functions to be rationalized via random-utility models with additive but nonparametric unobserved heterogeneity and general income-effects. Our proof is constructive, and facilitates nonparametric identification of preference-distributions without requiring identification-at-infinity type arguments. A corollary shows that symmetry, a key condition for previous rationalizability results, is equivalent to absence of income-effects. Our results imply theory-consistent nonparametric bounds for choice-probabilities on counterfactual budget-sets. They also apply to widely used random-coefficient models, upon conditioning on observable choice characteristics. The theory of partial differential equations plays a key role in our analysis. Keywords: Multinomial choice; Unobserved heterogeneity; Random utility; Integrability; Symmetry; Income effects; Partial differential equations; Nonparametric identification; Random coefficient models; Bounds on counterfactuals (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:223:y:2025:i:c:s0022053124001443 DOI: 10.1016/j.jet.2024.105938 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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